The Strategy

According to Akshali Shah, executive director of ₹3,000-crore dairy company Parag Milk Foods, the company’s biggest advantage is its integrated business model. "After Amul, we are the only dairy company with national presence. We have our own farm where we have 5,000 cows. We also procure from over five lakh farmers. We have our own processing unit, our own distribution channel, and we are a multi-brand company. We are able to sell milk at different price points-regular pouch milk at ₹60-65 per litre; value-added milk with longer shelf life at ₹92-100; and farm-to-home brand Pride of Cows at ₹130 per litre. We are able to sell across the strata."

Dairy is largely a local business in India. While the likes of Nestle and Britannia sell value-added products across the country, their dairy portfolio is a small part of their business. Parag is a pure-play dairy company which earns 80% revenue from value-added products. While its biggest strength is ghee and cheese (where it is close No.2 with 34% market share against Amul’s 36%), it is also building its equity in new-age categories such as whey protein under the brand Avvatar. Unlike most farm-to-home milk brands which cater to consumers within a radius of 100 kms, Parag is selling Pride of Cows in six cities and intends to go national. It also plans to introduce gourmet cheese, curd and ghee under the brand. Value addition was a great help during Covid, says Shah. "During Covid, we increased our procurement by almost 20%. We could get additional milk as most dairies had stopped procuring. As most people were at home, there was a lot of demand for products such as cheese and ghee. Our sales jumped over 48%." Newer categories such as premium milk and whey protein contribute 15% to revenue. Shah expects this to grow to 25% in next couple of years. Cheese and ghee account for 50% revenue.

Mid-sized brands are also going big on deeper local distribution. MTR Foods is a household name in South India, especially Karnataka. In 2007, the 100-year-old brand was bought by Norwegian industrial investment company Orkla ASA. Apart from MTR, which contributes 48% to the ₹2,200 crore Indian arm of Orkla ASA, the company acquired masala and spices brand Eastern Condiments in 2022. Though Orkla brands have a nationwide presence, the company has been aiming for deeper penetration into local markets. The home market of MTR, for instance, is Karnataka, and it has made sure its traditional portfolio of sambar and rasam powders, puliodarai mix (tamarind rice) and rava idli mix is available in as many as 3,000 villages in the state.

LT Foods

Featured In Fortune India Ranking

Fortune India Coverage

FMCG’s Middle Order Plays Stellar Innings