Dairy industry in Andhra Pradesh faced a piquant situation

The dairy industry in the State faced a peculiar situation following the lockdown imposed to contain the
spread of the Coronavirus (COVID-19).

Though there are no constraints faced in respect of production and ensuring supply of milk, the industry
is finding it difficult to dispatch the products to all the localities, especially gated communities, where
people are not allowing the delivery boys into their premises.

There are major dairies engaged in production and supply of milk with three major brands - Heritage,
Vijaya and Jersey - catering to a major chunk of the demand.

The industry is said to be faced with difficulty in reaching out its products as residents and residential
welfare associations are not allowing the delivery boys inside.

Interestingly, it was the police who stopped the delivery boys from reaching their destinations initially,
but they had been sensitised since and are allowing milk vans, forming part of essential commodities,
freely.

Coupled with this, the elderly vendors who sell milk sachets in different parts of the twin cities are
preferring to stay at home following the advisory given by the government from time to time.

Despite the challenges, one of the sectors in India that handled the pandemic well is the dairy industry,
especially in terms of packed dairy products. What boosted the industry was that the COVID-19
pandemic dramatically affected consumer’s dietary habits. As the lockdown gave people the opportunity
to rustle up dishes just like chefs do, the broadening culinary engagement pushed up consumption of
dairy products.

Although the biggest component of India’s dairy market is liquid milk, seeing the demand for longer-
lasting value products, manufacturers converted the surplus milk into highly demanded value-added
dairy products such as paneer, butter, cheese, ghee, and sweets, thus further boosting the dairy industry

The outlook for the dairy sector continues to be positive on the back of government support, increasing
population, per capita consumption, and expenditure on value-added products such as paneer, cheese,
and butter items.

Moreover, the dairy industry, which was facing headwinds during the onset of the COVID-19 pandemic,
has turned this crisis into an opportunity as the supply and consumption of value-added dairy products
has risen and only continues to witness an upward trajectory.

COVID-19 Impact

The sales of dairy-based products such as ice cream, cheese, flavored milk, yogurt, and frozen desserts
comprised the highest market revenue in the overall dairy sector which is approximately more than a
third of the organized dairy sector’s revenue which has declined up-to 2 to 3% CAGR in the first quarter
of 2020, whereas, the reduction in the prices and lockdown of the foodservice sector has drastically
impacted the local dairy farmers and have stalled overall dairy industry up to 10%.

Due to the apprehension about consuming cold products such as ice cream, flavored milk and yogurt
have shown a drastic declination in their consumption pattern.

To support the local farmers various government authorities have taken strict actions to recovers the
crises happened in the dairy sector, for instance.

The dairy industry, which experienced a stable growth across all the regions since the past few years,
has been experienced slow growth in pandemic situation.

After COVID 19

IMARC Group’s latest report, titled “Dairy Industry in Andhra Pradesh 2023-2028: Market Size, Growth,
Prices, Segments, Cooperatives, Private Dairies, Procurement and Distribution”, offers an in-depth
analysis of the Andhra Pradesh dairy market. The milk production in Andhra Pradesh mainly consists of
cow and buffalo milk. According to the report, the Andhra Pradesh dairy market size reached INR 608.1
Billion in 2022. Looking forward, the market is expected to reach INR 1,014.3 Billion by 2028, exhibiting a
growth rate (CAGR) of 8.8% during 2023-2028.

Some of the fastest growing segments include frozen/flavoured yoghurt, cheese, UHT milk, flavoured
milk and butter milk. The competitive landscape of Andhra Pradesh’s dairy market has also been
examined in this report. Some of the major players include Vijaya (Andhra Pradesh Dairy Development
Cooperative Federation Ltd).