Following the recent news that Fonterra Future Dairy, the joint venture between the New Zealand-based dairy nutrition company Fonterra and the Future Group, has unveiled dairy brand Dreamery in India,

Sumit Chopra, Consumer Research Director at GlobalData, a leading data and analytics company, offers his views:

“The launch of dairy brand Dreamery is in line with Fonterra Future Dairy’s strategy to strengthen its value-added dairy portfolio in India and cater to the discerning Indian consumers, who increasingly prefer high-quality dairy nutrition. GlobalData’s 2018 Q4 consumer survey reveals that 35% of Indian consumers often like to experiment with new dairy products while 70% are willing to pay premium price for better quality dairy products.

“Fonterra and Kishore Biyani’s Future Group entered into synergy-driven joint venture in 2018 to produce a range of consumer and food service dairy products for the Indian market. Fonterra’s global dairy innovation, manufacturing and nutrition expertise complement the Future Consumer’s leadership in retail and distribution, and present key growth opportunities for the partners.

“The launch comes at a time when the Indian dairy industry is transforming itself and there is a gradual shift from traditional locally-based dairy business model with limited products and brand differentiation to a new model where more value-added and innovative dairy products are in massive demand across the country. According to GlobalData, India accounted for 16.9% value share and 42.7% volume share in the Asia-Pacific dairy & soy food sector in 2017. Therefore, the company is aiming to build a strong consumer base and efficient distribution network along with strategic expansion in the value-added dairy space throughout India.

“Although the company is trying to crack the relatively high margin value-added milk-based products space and targeting the market share of 5% in seven years, there are questions about how the company will hunt ground in a dairy beverage business as every region in the country has two to three well-entrenched and well-established market players ranging from Amul, Mother Dairy, Nestle and regional players such as Baba Ramdev’s Patanjali, Nandini Co-op Credit Society, Parag Milk, Vijaya in Andhra Pradesh and Kerala co-op’s Milma, among others. Despite this, it will be interesting to see how Fonterra Future Group’s move will shake up its rivals and increase competition in the dairy sector.”