TERM PAPER ON POWDER MILK

INDUSTRY ANALYSIS
 Term Paper On
Powder Milk Industry Analysis

Prepared for
Dr. Jashim Uddin
Associate Professor
Department of Business Administration
East West University

Prepared by

Student Name Student I.D Participation

Shafika Yasmin 2017-2-13-038 20%
Abrar Rahman 2016-2-10-132 20%
Osman Gani 2018-2-10-204 20%
Afnan Ahmed 2017-1-10-064 20%
Imtiaz Ahmed 2019-1-10-074 20%
Letter of Transmittal
August 31, 2022
Dr. Jashim Uddin

Associate Professor

Department of Business Administration

East West University

Subject: Submission of Term paper on “TERM PAPER ON POWDER MILK INDUSTRY

ANALYSIS”

Dear Sir,
With due respect we are pleased to submit the termpaper that you gave us the permission and
opportunity to work on “TERM PAPER ON POWDER MILK INDUSTRY ANALYSIS”.
We tried to give our best effort in this assignment.
We tried to give our best effort to collect the necessary data. This assignment enhanced our
experience and we are thankful to you.
We hope that this assignment will meet your expectation.

Sincerely,
i Shafika Yasmin

ii Abrar Rahman

iii Osman Gani

iv Afnan Ahmed

v Imtiaz Ahmed

i
Acknowledgement
We would like to express our special thanks of gratitude to our teacher Dr. Jashim Uddin to
give us the golden opportunity to do this wonderful assignment on the topic “TERM PAPER
ON POWDER MILK INDUSTRY ANALYSIS” which also helped us in doing a lot of
Research and we came to know about so many new things. We are over helmed in all
humbleness and gratefulness to acknowledge our depth to all those who have helped us to put
these ideas, well above the level of simplicity and into something concrete.

Declaration
We here by declare that the report entitled “TERM PAPER ON POWDER MILK
INDUSTRY ANALYSIS” is done by us only.
We are also declaring that the report is avoid of plagiarism.
Name-
i. Shafika Yasmin

ii. Abrar Rahman

iii. Osman Gani

iv. Afnan Ahmed

v. Imtiaz Ahmed

ii
Table of Contents
Letter of Transmittal...................................................................................................................i
Acknowledgement.....................................................................................................................ii
Declaration.................................................................................................................................ii
Executive Summary..................................................................................................................iv
1. Introduction............................................................................................................................1
Origin of the Report:..............................................................................................................1
Objective of the Study............................................................................................................2
Scope of the Study:................................................................................................................2
Limitation of the Study:.........................................................................................................2
Methodology of the Study:.....................................................................................................2
2. Literature Review...................................................................................................................3
3. Discussion..............................................................................................................................5
Industry analysis:...................................................................................................................5
Demand of the product:..........................................................................................................5
Key supply drivers:................................................................................................................5
Nature of the product:............................................................................................................6
Predictability of business:......................................................................................................7
4. Findings..................................................................................................................................9
Recommendation..................................................................................................................10
5. Conclusion............................................................................................................................11
References................................................................................................................................12

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Executive Summary
The global milk powder market reached a value of US$ 30 Billion in 2021. Looking forward,
the market expects to reach US$ 45.1 Billion by 2027, exhibiting a CAGR of 7.03% during
2021-2027. Keeping in mind the uncertainties of COVID-19, we are continuously tracking
and evaluating the direct as well as the indirect influence of the pandemic on different end
use industries. These insights are included in the report as a major market contributor. Milk
powder is manufactured by dehydrating fluid milk in order to increase its shelf-life. It has a
similar nutrient profile as fluid milk, consisting of thiamine, proteins, vitamin C and B12, etc.
Apart from recombination and reconstitution, milk powder is also utilized for its functional
properties in several value-added foods such as confectionery, bakery and meat products. In
recent years, the demand for milk powder has increased as a number of countries have been
unable to meet their rising milk demand and rely on imported milk which is generally
procured in the form of milk powder.

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1. Introduction
Milk powder is a dry dairy product, which is obtained from dehydration of milk by using evaporation. The
purpose of making milk powder is to extend the life of milk without storing in refrigerator. There is many
types of powder milk like skimmed milk powder, dairy whitener, and whole milk powder. It is generally
used in baked desserts, confectionaries, infant formulas, and savory items. It is high in micro and macro
nutrients and it can be stored without substantial loss of quality due to absence of water. It is obtained
mainly by roller drying and spray drying method. It contains significant amount of protein, all twenty-one
stranded amino acids, notable amount of vitamin C and vitamin B12, calcium, nicotinamide riboside, and
other essential nutrients.

The demand for milk and milk products is increasing because of the spread of education, growing nutrition
awareness and purchasing power among people. Consumption of powderd milk is increasing in the
country due to increasing demand from sweet and ice-cream factories, bakeries, pastry shops. The demand
for powdered milk has also been rising as it is not feasible for the companies to reach packet milk to every
corner of the country. Due to a lack of availability of liquid milk, the processors import a huge amount of
milk powder and skimmed milk to meet the demand on the local market.

According to the Department of Livestock Services, milk production in Bangladesh amounted to 119.85
lakh tonnes in the 2020-21 fiscal years against the demand of 152.02 lakh tonnes. The deficit in production
is met by bulk imports of milk powder, mainly from Australia, New Zealand, Holland, Denmark and
Poland. According to Bangladesh Bank data, the country imported more than sixty thousand tonnes of milk
powder in 2021. Despite the huge demand and growth potential, the advancement of the industry is
impeded by several challenges in the ecosystem.

Every year the import duty on powdered milk is reduced in the budget. As a result, the domestic dairy
industry is facing problems to survive in the market. The government must formulate a sustainable
investment-friendly policy for the development of the powdered milk industry of this country. It is very
important to adopt and implement medium- and long-term plans to build the powdered milk production
industry in the country.

Origin of the Report:

This report was given to us as a part of the partial requirement of the “Strategic Management” (MGT-480)
of Bachelors of Business Administration program of East West University. Our course instructor Dr.
Jashim Uddin, Associate Professor, Department of Business Administration, has assigned us this report as
a part of the course. Sir has authorized the task of writing this report on a group basis.

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Objective of the Study: The general or broad objective of this study is about the condition of the
Powder milk industry of Bangladesh. This report is about the position, advancement, growth and overall
scenario of the industry over the time. It will help in understanding

• Market condition of dairy product specially powdered milk.

• Future of powder milk industry
• The opportunities and threat under this industries.
• Market demand and production of powder milk.
• And opportunities for new entrants in this sector.

Scope of the Study:

In this paper the main focus is to get the real-life knowledge about the milk powder sector. This study will
help to understand the overall powder milk industry of Bangladesh in recent times. It will help them to
know about many unknown facts and scenario who are panning operate business in this sector. This study
can facilitate different types of people in terms of knowing about a prominent and important sector which
is related to people’s health.

Limitation of the Study:

We can't prepare a report without limitations. As this is not an independent industry; it is attached with
dairy industry; because of lack of updated information available in internet and we were unable to collect
field level primary data it was challenging to collect the right, enough and updated information during the
study. The overall outcome of data analysis may not be fully flawless.

Methodology of the Study:

To conduct an effective study, an authentic and properly designed methodology with accurate Framework
is a must. The design is focused on the framework or the blueprint of the study to Collect information,
analyze, and create a conclusion. Collecting useful data is a vital task for any research. Here in this study,
we have collected our data from both primary sources and secondary sources. Though always the primary
level data is mostly preferred but because of lack of enough primary data mostly we had to use secondary
data. We mainly used websites, journals, articles and internet based statistics to collect our data.

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2. Literature Review
Title: Innovation in Milk Powder Technology (Philip M Kelly, 2006)

As new markets develop in areas of the world not typically associated with milk
consumption, the global trade in preserved milks is expanding. Additionally, it is expected
that global milk production will continue to expand, and it appears that a sizeable portion of
the additional milk produced will be turned into commodities like butter and powders. As a
result, continued investments in new spray drying technology will probably be used to follow
regional changes in milk production. It is important and challenging to successfully
implement advanced process control into the operation of big drying plants.

As the dairy sector continues to add value and develop distinctive selling characteristics, it is
utilizing prospects for the utilization of milk as a source of useful components. Review of
recent studies on the use of spray drying and other methods in the creation of dairy
ingredients for use in chocolate and the creation of microencapsulated powders.

Title: Milk Powder Ageing: Effect on Physical and Functional Properties (Marie E. C.
Thomas, 2010)

Because of the useful qualities of milk proteins, milk powders are increasingly regarded as
food ingredients. Multiple physicochemical problems, primarily caused by the lactose glass
transition, occur during the storage of milk powders. They significantly affect the physical
(workability) and practical (solubility, emulsifying, and foaming qualities) characteristics of
milk powders. First, the microstructure and chemical makeup of the surface of powder
particles are altered by lactose crystallization. As a result, workability of milk powder is
reduced. Milk proteins' solubility is harmed because their structural stability is compromised.
Additionally, particle collapse and caking take place, which mostly reduce the physical
qualities of milk powders (density and workability). The resulting mechanical stresses may
also promote the unfolding of proteins, which is harmful to solubility. Finally, as a person
ages, both enzymatic (the Maillard reaction) and chemical responses favor molecular
mobility. Milk powder's solubility is mostly decreased by protein interactions and
aggregations, which are enhanced by the Maillard reaction and oxidation. Emulsifying and
foaming characteristics are also decreased by the Maillard process. Time, milk components,
and their physical state have also been implied. Storage temperature and relative humidity
have been thought of as the main aspects involved.

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Title: Functionality of Milk Powders and Milk-Based Powders for End Use Applications
(Anup Sharma, 2012)

The production of newer varieties of milk powders and milk-based powders is looking for
potential consumers. The physical and functional characteristics of powders play an
important role in their application. These characteristics include powder structure, particle
size distribution, powder density, bulk density, particle density, occluded air, interstitial air,
flowability, rehydration (wettability, sinkability, dispersibility, solubility), hygroscopicity,
heat stability, emulsifying ability, water activity, stickiness, caking, and others.

Title: Interactions of Milk Proteins During the Manufacture of Milk Powders (Harjinder
Singh, 2007)

The manufacture of milk powder involves heating the milk, commonly known as preheating,
followed by evaporation and spray drying to concentrate the milk solids.
Ultrafiltration/diafiltration is commonly used prior to evaporation and drying in the
production of high protein milk powders. These processes cause interactions between various
components of milk that affect the function of the flour. The structure and stability of casein
micelles under milk-like conditions are fairly well known. However, the details of the effects
of the milk powder process on the structure and interactions of casein micelles are poorly
understood. Preheating milk before evaporation aims to produce a powder with specific
functional properties and uses. The main effect of preheating is the denaturation of whey
proteins and binding with casein micelles. The type and degree of association between casein
micelles containing $\kappa$-casein and whey proteins affects the behavior of casein
micelles during subsequent processing. Increased aggregation of micelles and increased
association of whey proteins with micelles. Few studies have examined the specific effects of
spray drying on casein micelles in milk. In the production of high-protein powders, the
concentration of milk by ultrafiltration, especially diafiltration before drying, can dissolve
colloidal calcium phosphate, loosen the casein micelle structure, and swell the casein micelle.
Increasing levels of concentration lead to a gradual breakdown of the micellar structure from
intact micelles to swollen diffusion micelles and finally to smaller fragmented micellar
structures. These changes in casein micelles make the milk system more susceptible to
protein-protein interactions during spray drying, thus affecting product functionality.

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3. Discussion
Industry analysis:
Powdered milk, also called milk powder is produced industrially by collecting raw milk from
the producers and by evaporating the raw milk to dryness and preserving all the essentials
materials. In the current milk powder industry New Zealand has been the most major
contributor. Then there comes Australia, China, Denmark, France, Belgium etc. Milk powder
is made. There are many variations in powdered milk segments. Whole milk powder,
skimmed milk powder, many more categories. Although whole milk is considered to be the
most natural state of milk.

Demand of the product:

The global milk powder market is growing at a considerable pace. The current prevailing
lifestyle of urban people and urban society structure has developed a situation, where having
the raw milk is sometimes difficult. As it is very perishable product milk powdered is the
ultimate choice for the fast fooding society. Demand of product like powdered milk is very
likely to be stable in the regular days, and also it is very much predictable that demand will
be some degree higher in the special occasions. Bangladesh has produced 119.85 lakh tonnes
of milk powder against the demand of 152.02 lakh tonnes of powdered milk in the 2020-21
fiscal year. Rest of the demand met by importing in bulk quantity from Australia, Holland,
Denmark etc. So Bangladesh is producing less than their market demand. Increasing demand
in the market is a possibility for any industry.

From the fiscal year 2005 to 2022 the production of milk powder locally in Bangladesh has
dramatically gone up. Which is a very good indicator for our country. Now more than half a
dozen milk processor are operating in Bangladesh. Upon these New Zealand dairy (Diploma),
Meghna group (Fresh), Arla food (Dano), Nestle Bangladesh (Nido), Pran dairy, Abul khair
group (Marks), Milk Vita are operating successfully in the milk industry.

Key supply drivers:

As per some executives in different companies working on producing milk powder, they said
that producing and processing milk based product is expensive than importing it. This is why
the bulk importers are gaining the advantage of this situation. The informal segment of the

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industry is dominated by small-scale farmers and market intermediaries, so quality control
processes are apparently non-existent. As a result, the quality of milk is not being ensured. As
farmers do not get the fair prices for their produce, they are often tempted to adulterate milk
to increase quantity to cover their costs. Bangladesh Dairy Farm Association president Imran
Hossain said that a farmer was offered only Tk 38-42 for a litre of milk depending on the fat
level, whereas the cost of production was, on average, Tk 48 a litre, driven by cost pressures
such as rising prices of fodder and raw feed ingredients. He said that the farmers should be
given more than Tk 50 a litre of milk to cope up with the rising cost of milk production.

He also said that low tariff on milk powder import prevented farmers from getting fair prices
for milk. So, he urged the government to increase the tariff up to 75 per cent.

Nature of the product:

Effect of socio-cultural environment affects largely in the demand of any product.
Sociocultural environment includes consumer’s change in lifestyle, attitudes, culture, tastes,
traditions. This is why in this modern time powdered milk option is very much appropriate
and applicable. The nature of powdered milk products allow it to store it for extended period
of time.

There is no doubt society is changing. Apart from consumer tastes and fashion the overall
structure of the society is changing day by day. It may appear to be not normal to many
living in the big cities today, that traditional milk delivery men come door to door and supply
us milk- as it was maybe 20 years ago. Over the last two to three decades things have
changed a lot. Today a large number of powdered milk produces have come to the market.
They been collecting their raw materials, then processing and packaging, and selling their
products in different brand names. With the promise of hygiene and food safety, many
companies are doing their business in a successful manner.

Where the traditional raw milk is very perishable products, our powdered milk formula is
very much suitable for our day to day activity. This form of product allows more mobility
and storability for longer period.

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Predictability of business:
Population is increasing day by day. It is said that almost 80% of the total population in
Bangladesh lives in bigger cities. People living in the cities are most likely the biggest buyer
of powdered milk. Also powdered milk is used for infants. Different occasions such as Eid-
ul-Adha, Eid-ul-Fitr, etc increase the demand for milk powder. Because in that mean time
sweets and deserts are made in the households.

It is said that, The milk powder market is expected to grow at growth rate of 6.33% by 2028.
The growing population in the urban areas are major contributor in this. Furthermore, the
globalization, increasing number of working population will boost the milk powder market in
the coming times.

According to the general secretary of Bangladesh dairy farmers association (BDFA), Though
it is late, the dairy sector has finally witnessed a revolutionary rise in the last couple of years.
He believes that involving young people in this sector, developing information technology,
more investments will drive the growth furthermore. The Bangladesh government has also
launched a project named “Livestock and Dairy development project” to help this sector
grow.

As Bangladeshi powdered milk producers are producing less than the market demand, and
that excess demand are met by the milk importers. Then it is to be said that our local producer
can produce more to meet the market demand ensuring higher quality, thus reducing the
dependability of importing from abroad.

Powdered milk products of popular brands are getting costlier due to rising prices in the
international market caused by higher transportation costs and the growing value of US
dollars, Powdered milk prices have increased by Tk 50 to Tk 80 per kilogram (kg) as rising
transportation charges and the growing value of US dollars pushed up costs in the
international market. The price of 1 kg packets of powdered milk under brand names such as
Nido, Dano, Marks and Diploma rose from Tk 530 to Tk 560, Tk 680 to Tk 730, Tk 580 to
Tk 660 and Tk 680 to Tk 740 respectively. As soon as the price of any basic product
increases, it hits another sector and that is what happened to the cost of powdered milk.
Pricing is dependent on multiple factors, both external and internal. It can be affected by, but
is not limited to, the increase of global milk prices, higher logistic costs, and import duties
and so on. In the current fiscal year, powdered milk imports increased 9 per cent while prices
of the product increased by 12 per cent year-on-year. According to the Custom House,

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Chattogram, about 101,153 tonnes of powdered milk worth Tk 2,594.4 crore was imported in
the 10 months up till April of the ongoing fiscal year. About 93,247 tonnes of powdered milk
worth Tk 2,143.33 crore was imported during the same period in fiscal 2020-21. The price of
one tonne of the product was about $2,500 two or three years ago but now, the same amount
costs $7,000 to $9,000. In the last auction in the international market in May, the price of
powdered milk had come down by 2-3 percent.

Powder milk, no doubt, is one of the most flourishing industries in the country over the past
decades. From a very humble beginning the industry grew to a commendable height thanks to
a number of dedicated companies backed by large-scale investment and introduction of
modern technology. The potential of the expanding Powder milk industry in Bangladesh is
very high, and mentioned the lack of processing as a major hurdle to further expansion. It
also mentioned that the country's Powder milk industry has been struggling to thrive and
meet local demand due mainly to poor monitoring of quality control and pricing

The market for powder milk closely represents perfect competition. All powder milk
suppliers produce the same good and the price is controlled. Businesses sell one product, and
every product is the same. Price is not influenced, increased or decreased, by a business or a
business’s market share. Consumers have expert knowledge of the product being sold and the
prices they are being sold at.

Dairy commodities is a collective term for dairy-based products, which are being traded
on exchanges around the world. The following dairy products are currently traded as a
commodity. Milk Class 3. This is milk used mainly for the production of cheddar cheese.
Milk Class 4. This type of milk is used in the production of butter and non-fat dry milk. Milk
Powder: this product is created by evaporating milk to dryness. Non-Fat Dry Milk. A type of
milk that can be stored and be used in various food production processes. Butter: the basic
form of butter which can later be refined into the various variations available in grocery
stores. Dry Whey. A by-product of the milk-production process. This commodity is used in
bread, cereal and protein bars.

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4. Findings
(From Nestle Bangladesh Perspective)

Nestle has a lot of products. Their milk product are the most popular one among all the
products. The milk power products are Nido, nestle everyday, nestle coffee mate are the
power milk products they produce.

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Here we can see that their milk products are the most selling products. Powder milk products
generate almost 91.4% revenue for the segment. Their revenue has increased from the
previous year. So it seems that the powder milk products are generating maximum revenue
and the demand is increasing every year.

In Bangladesh they have their production unit. Their major production is powder milk based
because in Bangladesh nestle is mainly known for their powder milk products. The whole
production unit is based on it. The other segments are smaller than the powder milk. Because
this industry is flourishing in our country day by day. There are a lot of powder milk product
manufacturing company in the country so the need to push hard to stay in the game in our
country.

Recommendation
1. Government should monitor the quality of powder milk of local brands.
2. Authority can lower the import tariff in such products.
3. Every company should maintain a healthy competition.
4. Try to come up with new and better formula.
5. Bangladeshi brands may try to go global.

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5. Conclusion
Powder milk is a very essential product. It has a lucrative market in Bangladesh. But
unfortunately the local brands fail to grab the market because of higher price and low quality.
The price of imported powder milk is also out of reach because of the increase in
transportation cost

Powder milk is one of the important products in all over the world. It is also popular I
Bangladesh because we live in age of modern world. So everything is moving very fast. As a
result BD people started to take powder milk. We can see that it is mostly use in babies but
some cases powder milk also use in some of recipes when makes the dishes more delicious.
Milk is very necessary to humans. Milk contains protein, content, and minerals. Which is
essential for health. Though it has some barriers but our govt. is trying to reduce import cost
as we have grown up day by day. So in future we will have to produce powder milk by our
own. It will reduce our import cost

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References
1. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1471-0307.2006.00251.x
2. https://www.tandfonline.com/doi/abs/10.1080/10408690490464041
3. https://ift.onlinelibrary.wiley.com/doi/abs/10.1111/j.1541-4337.2012.00199.x
4. https://lait.dairy-journal.org/articles/lait/abs/2007/04/l07s4513/l07s4513.html

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