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Indian Dairies Shift to Milk-Based Beverages

19 MAY,2017

NFS Correspondent

Indian dairies like Amul and Parag Milk Foods and aerated drink firms like PepsiCo and CocaCola are increasingly entering into novel and Western-influenced milk-based beverages. Milk-based beverages offer significantly higher margins than traditional milk drinks.

According to media reports, industry representatives and sector analysts estimate more players from dairies, aerated drinks and fast moving consumer goods entering the highly attractive and rapidly growing new segment of the market.

Dairy beverages as a segment is estimated to post sales of $1 billion (Rs 6,400 crore) in India by fiscal 2021, compared with Rs 1,280 crore in fiscal 2015, said a report by the Tata Strategic Management Group.

As against traditional milk-based beverages like lassi, butter milk and plain flavoured milk, dairies and aerated beverage makers have of late come up with products like oats milk, coffee milk and juices mixed with milk, registering quicker acceptance.

Pankaj Gupta, Senior Practice Head, consumer and retail practice at the Tata Strategic Management Group, said, "As dairies enjoy higher margins, they are focusing more on easy-to-consume form of beverages and are launching various products for every category of age."

Shiva Mudgil, Analyst, Rabobank, said, "The growing demand for milk-based beverages indicates a shift in consumer demand with rising purchasing power ... The market is still at a nascent stage in India, but is growing rapidly with newer players entering the fold and expanding rapidly."

Beverages are fast emerging as a big revenue generator for dairies, said Kedia of Parag Milk Foods. According to him, the share of the beverages segment to overall revenue at his company could reach double digits in the next five years from a low single digit now.

While innovations in new flavours are taking place, Gupta of the Tata Strategic Management Group believes that development of newer pack options for consumers will also result in attractive opportunities for packaging providers.

Currently, milk-based beverages are being sold in tetrapaks, metal cans, glass bottles, pet bottles and pouches.

Gupta said, "Dairies' next phase of growth would witness market expansion driven by newer consumption occasions or recruiting newer consumers through products and packaging."

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