Marketing of Liquid Milk: A Case Study of Ahmedabad Milk Market

Indian dairy industry can be divided into two types of enterprises: Liquid Milk and Milk Products. In the procurement and marketing of liquid milk, there is strong presence of co-operative and traditional private channels though the organised sector private enterprises also exist. The packaged liquid milk market alone is of the order of Rs. 12, 000 crore and has been growing at the rate of 10 per cent annually (Sodhi, 2005). On the other hand, in the marketing of (western) dairy products, there are only organised large co-operative, multinational and domestic private sector enterprises. The orientation of the large private dairy sector has been, historically, towards milk product marketing. The private domestic and multinational enterprises are attracted to dairy product manufacturing because of the ease of profit making through brand marketing by reaching to high income consumers, SNF (Solids Not Fat) surplus and lesser hassles in marketing (Shah et al., 1995). The price realisation per litre of milk is higher in the case of western milk products. There are a few organisations which are into both liquid milk as well as milk products. These two categories differ in terms of their ownership, size of business and profitability. Whereas liquid milk business is dominated by co-operative or private Indian firms, the milk product business is largely in the hands of multinational corporations (MNCs). The presence of private dairies in liquid milk is confined only to certain cities and regions (Promar International, 2001). This paper examines the profile of organised private sector in liquid milk business, its growth, performance, business and marketing strategies and prospects, with special reference to Gujarat state and the Ahmedabad milk market. This study is based on the secondary data and the interviews with the dairy unit owners and managers to obtain qualitative information. The interaction with private dairies was restricted only to Ahmedabad city and mainly focused on liquid milk, as Ahmedabad is one of the most competitive milk markets in the country with more than 25 brands of liquid milk being marketed in the city. Four private dairy owners, who are significant and emerging players in Ahmedabad milk market, were interviewed. In Section II, the nature and dynamics of the Ahmedabad milk market are analysed.