World's largest market for everthing dairy

India ranks among the world's largest and fastest-growing markets for milk and milk products.

The market size in value terms for milk and milk products, including the organised and unorganised sector, is of the order of US$47.6 billion (INR 200,000 crore), a base of 95-odd million tonnes, growing at nearly 7.5 per cent annually. India is not only the world's largest milk producer, but also the world's largest milk consumer.

Why is it important ?

According to most published industry reports, supported by our insights from talking to major industry players, the demand for value-added milk products in particular is already outstripping India's domestic supply. The reasons for this are three fold:

1. The Indian middle class (depicted below) is demanding a dramatically increasing supply of valued-added milk products due to changing lifestyles.

2. Approximately 45% of the milk produced in India is consumed as liquid milk, with only about 12% being delivered to processors (as against the world average of 70%, and almost 98% in New Zealand). Further, the bulk of Indian milk not used for drinking is used in the unorganised sector for making mithai (sweets) or other traditional products - like dahi (yoghurt) and paneer (a kind of cheese).

3. Only 5% of all milk is sold through traditional organised retailers, while 70% is delivered directly to consumer homes through special milk agents and 25% is sold through vending machines or small street-side kiosks in the more urban areas (according to the Tetrapak Dairy Index).

What are the opportunities?

There are many opportunities in the Indian Dairy sector. India's consistent and high economic growth in the last decade has led to a dramatic rise in the number of families with school age children and both parents working. This has fueled demand for cheese in convenient slice form for lunches and snacks. This trend has been picked up by the hundreds of organised supermarkets that have developed over the last 5 years.  Further, because the Indian "sweets industry" is very large, there is demand for skimmed milk powder in larger packs (to produce toned and double toned milk). This particular demand is acute from May to July and the prices are typically guided by international prices. The demand is most acute in East, North East and North West India.

The demand for larger blocks of cheese is also evident in the food service market, since a very large proportion of Indian cuisine uses cheese. The pizza market by itself is very large.  India is one of the fastest-growing markets for cheese with annual growth at around 10-15% with a total consumption of about 7,000 tons a year, according to an official of the Indian Agri-Commodity Federation.  Arguably, nowhere else in the world do people consume cheese in so many different forms and use cheese in so many varieties of food preparation as in India!

India is a great example of a consumption-driven economy, where the goods makers and retailers are as yet unable to meet the consumer demand - there is no supply glut. Demand for both value-added milk products and technology to enable Indian milk companies to add value to their milk are boundless. The value-added milk revolution in India is happening and happening now.

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