The dairy industry in India is banking largely upon milk procurement to ensure raw material for the next phase of growth in branded milk and value-added products in this sector. Both, existing entities and new corporate entrants with deep pockets have initially focused on strengthening procurement of milk from farmers.
The organised dairy industry has seen strong growth in the past decade, mainly driven by the formalisation of perishable milk categories such as milk, curd and paneer from loose to packed formats, coupled with strong growth in value-added segments like cheese, yoghurt, baby food and ice-cream. According to a recent Rabobank study, the value-added segment is expected to increase market share in the organised dairy market from 23 per cent in 2014-15 to 30 per cent by 2019-20. This segment handles 26 per cent of the milk produced in India, of 37 million tonnes a year, expected to be 60 mt in five years, with 35 per cent share in milk. Private dairy companies that capture 60 per cent share of the organised segment will continue to grow faster than co-operatives.