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Dairy Industry

Introduction:-

A dairy is a facility for the extraction and processing of

animal milk—mostly from cows or goats, but also from
buffalo, sheep, horses or camels —for human
consumption. Typically it is a farm (dairy farm) or section
of a farm that is concerned with the production of milk,
butter and cheese.

Terminology differs slightly between countries. In particular, in the U.S.

a dairy can also be a facility that processes, distributes and sells dairy
products, or a room, building or establishment where milk is kept and
butter or cheese is made. In New Zealand English a dairy means a
corner convenience store, or superette—and dairy factory is the term for
what is elsewhere called a dairy.

As an attributive, the word dairy refers to milk-based products,

derivatives and processes, and the animals and workers involved in their
production: for example dairy cattle, dairy goat. A dairy farm produces
milk and a dairy factory processes it into a variety of dairy products.
These establishments constitute the dairy industry, a component of the
food industry.
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History
Milk producing animals have been domesticated for thousands of years. Initially, they were part
of the subsistence farming that nomads engaged in. As the community moved about the country,
their animals accompanied them. Protecting and feeding the animals were a big part of the
symbiotic relationship between the animals and the herders.

In the more recent past, people in agricultural societies owned dairy animals that they milked for
domestic and local (village) consumption, a typical example of a cottage industry. The animals
might serve multiple purposes for pulling a plough as a youngster and etc. In this case the
animals were normally milked by hand and the herd size was quite small, so that all of the
animals could be milked in less than an hour—about 10 per milker. These tasks were performed
by a dairymaid (dairywoman) or dairyman.

With industrialization and urbanization, the supply of milk became a commercial industry, with
specialized breeds of cattle being developed for dairy.

Farmer
milking a cow by hand.

Historically, the milking and the processing took place

close together in space and time: on a dairy farm. People
milked the animals by hand; on farms where only small
numbers are kept, hand-milking may still be practiced. But
now when producing milk for commercial purpose certain
mechanisms are developed to milked the animals.
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Dairy Industry Structure

While most countries produce their own milk products, the structure of the dairy
industry varies in different parts of the world. In major milk-producing countries
most milk is distributed through wholesale markets. In Ireland and Australia, for
example, farmers' co-operatives own many of the large-scale processors, while in
the United States many farmers and processors do business through individual
contracts. In developing countries, the past practices of farmers marketing milk in
their own neighborhoods are changing rapidly. Notable developments include
considerable foreign investment in the dairy industry and a growing role for dairy
cooperatives. Output of milk is growing rapidly in such countries and presents a
major source of income growth for many farmers.

Industrial processing of milk

Figure 1. Figure 2.

1. A Fonterra cooperative dairy factory in Australia.

2. Interior of a cheese factory in Seine-et-Marne, France

Dairy plants process the raw milk they receive from farmers so as to extend its marketable life.
Two main types of processes are employed: heat treatment to ensure the safety of milk for
human consumption and to lengthen its shelf-life, and dehydrating dairy products such as butter,
hard cheese and milk powders so that they can be stored.

Products formed after processing of milk

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Cream and butter

Today, milk is separated by large machines in bulk into cream and skim milk. The cream is
processed to produce various consumer products, depending on its thickness, its suitability for
culinary uses and consumer demand, which differs from place to place and country to country.

Milk powders

Milk is also processed by various drying processes into powders. Whole milk, skim milk,
buttermilk, and whey products are dried into a powder form and used for human and animal
consumption...

Milking machines

Milking machines are used for extracting milk

The milking machine extracts milk from all teats.

Milking machines are used to harvest milk from cows when manual milking becomes inefficient
or labour intensive.

Position of India in the Dairy Industry

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The highest milk producer in the entire globe – India boasts of that status. India is otherwise
known as the ‘Oyster’ of the global dairy industry, with opportunities galore to the entrepreneurs
globally. Anyone might want to capitalize on the largest and fastest growing milk and mil
products' market. The dairy industry in India has been witnessing rapid growth. The liberalized
economy provides more opportunities for MNCs and foreign investors to release the full
potential of this industry.

The main aim of the Indian dairy industry is only to better manage the national resources to
enhance milk production and upgrade milk processing using innovative technologies.

Potential for investment in the dairy industry

Some areas of Indian dairy industry can be toned up by the evocation of differentiated
technologies and equipment from overseas. These include:

1. Raw milk handling: The raw milk handling needs to be elevated in terms of
physicochemical and microbiological properties of the milk in a combined manner. The
use of clarification and bactofugation in raw milk processing can aid better the quality of
the milk products.
2. Milk processing: Better operational ratios are required to amend the yields and abridge
wastage, lessen fat/protein losses during processing, control production costs, save
energy and broaden shelf life. The adoption of GMP (Good Manufacturing Practices) and
HACCP (Hazard Analysis Critical Control Points) would help produce milk products
adapting to the international standards.
3. Packaging: Another area that can be improved is the range of packing machines for the
manufacture of butter, cheese and alike. Better packaging can assist in retaining the
nutritive value of products packed and thus broaden the shelf life. A cold chain
distribution system is required for proper storage and transfer of dairy products.
4. Value-added products: There's vast scope for value-added products like desserts,
puddings, custards, sauces, mousse, stirred yoghurt, nectars and sherbets to capture the
dairy market in India.

The Indian dairy industry has aimed at better management of the national resources to enhance
milk production and upgrade milk processing involving new innovative technologies.
Multinational dairy giants can also make their foray in the Indian dairy market in this
challenging scenario and create a win-win situation for both.

Overview of the Indian Dairy sector

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• The country is the largest milk producer all over the world, around 100
million MT
• Value of output amounted to Rs. 1179 billion (in 2004-05) (Approximately
equals combined output of paddy and wheat!!)
• 1/5thof the world bovine population
• Milch animals (45% indigenous cattle, 55 % buffaloes, and 10% cross bred
cows)
• Immensely low productivity, around 1000 kg/year (world average 2038
kg/year)
• Large no. of unproductive animals, low genetic potency, poor nutrition and
lack of services are the main factors for the low productivity
• There are different regions – developed, average, below average (eastern
states of Orissa, Bihar and NE region) in the dairy industry

Indian dairy companies

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There are large amount of companies that deals in dairy business in India. Every state has a
different dairy company like sanchi in mp, mother dairy in Delhi, and many other, but the first
name that comes in mind after hearing the name of dairy companies is Amul !.

Amul (Anand Milk United Limited)

The Amul Plant at Anand featuring the Milk Silos

Introduction
Amul ("priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," (meaning
Precious) was suggested by a quality control expert in Anand ) , formed in 1946, is a dairy
cooperative in India. It is a brand name managed by an apex cooperative organization, Gujarat
Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by some
2.8 million milk producers in Gujarat, India.

AMUL is based in Anand, Gujarat and has been an example of a co-operative organization's
success in the long term. It is one of the best examples of co-operative achievement in the
developing economy. "Anyone who has seen … the dairy cooperatives in the state of Gujarat,
especially the highly successful one known as AMUL, will naturally wonder what combination
of influences and incentives is needed to multiply such a model a thousand times over in
developing regions everywhere." The Amul Pattern has established itself as a uniquely
appropriate model for rural development. Amul has spurred the White Revolution of India,
which has made India the largest producer of milk and milk products in the world [citation needed]. It is
also the world's biggest vegetarian cheese brand.

Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an
annual turnover of US $1050 million (2006–07). Currently Unions making up GCMMF
have 2.8 million producer members with milk collection average of 10.16 million liters per
day. Besides India, Amul has entered overseas markets such as Mauritius, UAE, USA,
Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries.
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Its bid to enter Japanese market in 1994 did not succeed, but now it has fresh plans
entering the Japanese markets. Other potential markets being considered include Sri
Lanka.

GCMMF Today
GCMMF is India's largest food products marketing organization. It is a state level apex
body of milk cooperatives in Gujarat, which aims to provide remunerative returns to the
farmers and also serve the interest of consumers by providing affordable quality products.
GCMMF markets and manages the Amul brand. From mid-1990s Amul has entered areas
not related directly to its core business. Its entry into ice cream was regarded as
successful due to the large market share it was able to capture within a short period of
time – primarily due to the price differential and the brand name. It also entered the pizza
business, where the base and the recipes were made available to restaurant owners who
could price it as low as 30 rupees per pizza when the other players were charging
upwards of 100 rupees.

The Three-tier "Amul Model"

The Amul Model is a three-tier cooperative structure. This structure consists of a Dairy
Cooperative Society at the village level affiliated to a Milk Union at the District level
which in turn is further federated into a Milk Federation at the State level. The above
three-tier structure was set-up in order to delegate the various functions; milk collection
is done at the Village Dairy Society, Milk Procurement & Processing at the District Milk
Union and Milk & Milk Products Marketing at the State Milk Federation. This helps in
eliminating not only internal competition but also ensuring that economies of scale are
achieved. As the above structure was first evolved at Amul in Gujarat and thereafter
replicated all over the country under the Operation Flood Programmed, it is known as the
‘Amul Model’ or ‘Anand Pattern’ of Dairy Cooperatives.

Achievements of the "Amul Movement (Amul model)

1. The phenomenal growth of milk production in India – from 20 million MT to
100 million MT in a span of just 40 years – has been made possible only because
of the dairy cooperative movement. This has propelled India to emerge as the
largest milk producing country in the World today.
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2. The dairy cooperative movement has also encouraged Indian dairy farmers to keep
more animals, which has resulted in the 500 million cattle & buffalo population in
the country – the largest in the World.
3. The dairy cooperative movement has garnered a large base of milk producers, with
their membership today boasting of more than 13 million member families.
4. The dairy cooperative movement has spread across the length and breadth of the
country, covering more than 125,000 villages of 180 Districts in 22 States.
5. The dairy cooperatives have been able to maintain democratic structure at least at
the grass-root level with the management committee of the village level unit
elected from among the members in majority of the villages.
6. The dairy cooperatives have also been instrumental in bridging the social divide of
caste, creed, race, religion & language at the villages, by offering open and
voluntary membership.
7. The dairy cooperatives have been successfully propagating the concepts of
scientific animal husbandry & efficiency of operations, which has resulted in low
cost of production & processing of milk.
8. The movement has been successful because of a well-developed procurement
system & supportive federal structures at District & State levels.
9. Dairy Cooperatives have always been proactive in building large processing
capacities, which has further propelled growth of milk production.
10. The dairy cooperatives are among those few institutions in India, which still
cherish a strong Cooperative identity, values and purpose. They still boast of
idealism & good will of members and employees.
11. The dairy cooperatives have removed the poor farmers of India from the shackles
of agents & middlemen and provided an assured market for their produce. As
these are the institutions run by farmers themselves, it has also resulted in fair
returns to the members for their produce
12. Dairy cooperatives have been able to create a market perception of honesty &
transparency with their clean management

Amul products line:-

Amul has a large variety of products; some of them are given below,
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Bread Spreads

Amul Butter Amul Lite

Utterly Butterly Low fat, low
Delicious Cholesterol Bread
Spread

Delicious Table
Margarine
The Delicious way to
eat healthy

Milk Drinks

Amul Kool Milk Shaake Amul Kool

Amul Kool Cafe Kool Koko

A delight to Chocolate
Lovers. Delicious
Chocolate taste

Nutramul Energy Amul Kool Chocolate

Drink Milk
A drink for Kids -
provides energy to
suit the needs of
growing Kids
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Amul Kool Flavored Amul Kool Flavored

Bottled Milk Tetra Pack

Amul Masti Spiced Amul Lassee

Buttermilk
Amul introduces the
Best Thirst Quenching
Drink

Amul Kool Thandai

Powder Milk

Amul Spray Infant Milk Amul Instant Full

Food Cream Milk Powder
Still, Mother's Milk is A dairy in your home
Best for your baby

Sagar Skimmed Milk Sagar Tea Coffee

Powder Whitener
Which is especially
useful for diet
preparations or for use
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by people on low calorie

and high protein diet.

Amulya Dairy Whitener

The Richest, Purest
Dairy Whitener

Fresh Milk

Amul Fresh Milk Amul Gold Milk

This is the most
hygienic milk available
in the market.
Pasteurized in state-of-
the-art processing
plants and pouch-
packed for convenience.

Amul Taaza Double Amul Lite Slim and

Toned Milk Trim Milk
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Amul Fresh Cream Amul Shakti Toned Milk

Amul Calci+ Amul Buttermilk

Cheese

Amul Pasteurized Amul Cheese Spreads

Processed Cheese Tasty Cheese Spreads in 3
100% Vegetarian Cheese great flavours...
made from microbial
rennet

Amul Emmental Cheese Amul Pizza Mozzarella

The Great Swiss Cheese Cheese
from Amul, has a sweet- Pizza cheese...makes
dry flavour and hazelnut great tasting pizzas!
aroma

Gouda Cheese
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For Cooking

Amul / Sagar Pure Cooking Butter

Ghee
Made from fresh
cream. Has typical
rich aroma and
granular texture.
An ethnic product
made by dairies
with decades of
experience.

Amul Malai Paneer Utterly Delicious Pizza

Ready to cook
paneer to make
your favorite
recipes!

Mithai Mate Masti Dahi

Sweetened
Condensed Milk -
Free flowing and
smooth texture.
White to creamy
color with a
pleasant taste.

Pro-biotic Dahi
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Desserts

Amul Ice Creams Amul Shrikhand

Premium Ice Cream A delicious treats,
made in various anytime.
varieties and flavours
with dry fruits and
nuts.

Amul Mithaee Gulab Amul Chocolates

Jamuns The perfect gift for
Pure Khoya Gulab someone you love.
Jamums...best served
piping hot.

Amul Basundi Amul Yogi Yoghurt

Health Drink

Nutramul Amul Shakti Health

Malted Milk Food Food Drink
made from malt Available in Kesar-
extract has the Almond and Chocolate
highest protein flavours.
content among all the
brown beverage

And in future the AMUL will be launched purified water named ‘NARMADA NEER’.
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Market share of GCMMF (Amul Brand) in India

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Target customers of Amul

Amul is that company which satisfies the need of all types of it customers. Amul products are
available at different rates from low to high so the consumer can select the product according to
his needs.

Amul is for every body for the people with low income as well as high income, so Amul targets
its customer on mass basis.
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Advertisement strategy

The advertisement strategy of Amul is different from many companies; they promote their
products with sketches for example

An Amul butter ad on Pakistan's Kargil War fiasco. The

image shows the "Amul baby" in between George
Fernandes and Atal Bihari Vajpayee.

Its advertising has also started using tongue-in-cheek

sketches starring the Amul baby commenting jovially on
the latest news or current events. The pun in her words has
been popular. Amul outdoor advertising uses billboards,
with a humorous take on current events and is updated
frequently. The Amul ads are one of the longest running
ads based on a theme, now vying for the Guinness records
for being the longest running ad campaign ever with
Smokey
Bear.
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The sales turnover of AMUL from 1994

to 2009
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Amul competitors
The success of Amul resulted in similar organizations being setup by state governments
throughout India, most of which had reasonable success. Examples are Milma in Kerala, Vijaya
in Andhra Pradesh, Aavin in Tamil Nadu, K.M.F (Nandini) in Karnataka, Sudha in Bihar, Omfed
in Orissa, saras in Rajasthan, Parag in Uttar Pradesh, Verka in Punjab, Aanchal in uttaranchal,
Vita in Haryana and others.

Other co-operative rivals of Amul include National Dairy Development Board (NDDB) (with its
Mother Dairy and Sugam brands). With Amul entering the sports drink market, its rivals now
include Coca Cola and PepsiCo.

The international competitor of Amul is Nestle which provide milk and


butter cubes and flavored milk in Indian and other countries.

International competitor (Nestle)

History:

Henry Nestle. Born in 1814 .Trained to be a pharmacist. Created the first milk and cereal based infant food
Ferine Lacteal Henri Nestle. Founded the company in 1867

Nestle grew from a small company producing powdered milk and cereal foods for infants into a global food
company feeding much of the world’s population,

The Indian business vision

To rapidly build Nestle India as the respected and trustworthy leading food, nutrition, health and wellness
company ensuring long term sustainable and profitable growth.
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In 1961 nestle started to replicate its successful milk models in Asian countries with moga in India, followed
by Sri Lanka in 1982, Indonesia 1986, Pakistan 1988, China 1990 and also in other Asian countries

Nestle processing unit in India

Moga (Punjab) 1961

Samalkha
(Haryana) 1993

Choladi (Tamilnadu) 1967

• Starting in 1961 Nestle set up its first milk processing facility at Moga in
the state of Punjab
• Built in 1991, today Samalkha factory in Haryana alongside with moga
producers over 100,000 tons of milk products annually

Nestle story of success

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Helping farmers to improve productive

Nestle Products
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Nestle has a large no. of products but we will discuss about those products those
have competition with Amul.

NESTLÉ EVERYDAY Ghee is 100% pure Clarified Butter hygienically packed to preserve its
rich aroma and granular texture. As a cooking medium, NESTLÉ EVERYDAY Ghee helps you
add that authentic ethnic aroma and flavor to Indian preparations every time, everyday.

A Partly Skimmed Sweetened Condensed Milk, NESTLÉ MILKMAID is a versatile product and
excellent as a dessert ingredient. With MILKMAID, you can whip up lip-smacking desserts for
your family in the shortest possible time.

NESTLÉ EVERYDAY Dairy Whitener is a creamy

Dairy Whitener specially made to add a rich, smooth
taste to your tea. Every time, every day.

Apart from milk products nestle also deals in these

products,
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Prepared Dishes & Cooking Aids

preparing well balanced meals is a snap with Nestlé. Beverages

drink to an active life with Nestlé Beverages.

Chocolates & Confectionery

Delighting the senses with a range of tastes and textures.

There are some others competitors of AMUL around the world:-

• Britannia
• Heinz
• HUL
• Cadbury
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Financial Analysts Meet Mission 2020 of AMUL

 Amul envisages that the dairy cooperatives of Gujarat will
have a group turnover of Rs. 27000 crores by the year 2020.
This will be a three-fold increase over its current group turnover of approx.
Rs. 9600 crores. Milk production in milk shed area will increase to 231 lakh
kg per day (23.1 million kg per day), at an annual growth rate of 4%.

 Amul will create fresh avenues for growth by tapping the rising demand for
new value-added products. Special emphasis will be given to strengthening
their presence in the large market for liquid milk, in metropolitan cities.

 Plan to double to processing capacity of dairy plants to 20.7 million kg per

day, by 2020. This would include multi-fold capacity expansion for major
product categories including milk powders, Ice-cream, paneer, cheese,
ethnic sweets, curd, ghee and other dairy products.

SWOT ANALYSIS OF AMUL

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Strength Weakness
• Demand profile • Logistics of procurement
• Flexibility of product • Competition
mix • Short self life of its
• Technical manpower products
• Trust enjoyed by its • Completely dependent
products on villages for its raw
• Strong cooperative material
organization • Salaries offered is less
• Introduced TQM compared to
competitors

Opportunities Threat
• Value addition • Milk vendors, the un-
• Export potential organized sector
• Used internet to sell • Strong competition from
its products MNCs
• Introduced hybrid • Competition from
products in the private dairies and local
market milk suppliers
• Exploring foreign • The yield of Indian
markets cattle still much lower
than other dairy
countries
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