Following the news that Indian multinational conglomerate company ITC Ltd, plans to expand its dairy beverages portfolio to the rest of the country,
Shagun Sachdeva, Consumer Insights Analyst at GlobalData, a leading data and analytics company, offers her view:
“ITC is trying to crack the relatively high margin value-added milk-based products and at the same time looking to strengthen its fruit beverage offerings to cater to the discerning Indian consumers who are increasingly preferring healthier options. In addition to expanding its dairy business across the country, ITC is also looking at export opportunities for Badam milkshake in Dubai and Saudi Arabia markets to capitalize on the demand for dry-fruit-based milkshakes from Kerala population in these countries.
“Although ITC is strongly positioned in the markets it serves, there are questions about how the company will hunt ground in dairy beverage business as more than three-fourths of the market is still unorganized in India and every region in the country has two to three well-entrenched local players. Besides market leader Amul, there are other strong co-operative brands at the state level, such as Nandini in Karnataka, Vijaya in Andhra Pradesh, Verka in Punjab, Saras in Rajasthan, Milma in Kerala, Gokul in Kolhapur and Sudha in Bihar and other regional players such as Mother Dairy and Kwality in the north, Metro and Mother Dairy in the east, Prabhat and Parag in the west and Hatsun and Heritage in the south, which make the market hyper competitive. In addition, multinationals like PepsiCo and Coca-Cola have been pushing ready-to-drink milk-based beverages, posing stiff competition and making it imperative for ITC to focus on its procurement systems and bringing efficiency in supply chain.
“Against this backdrop, the move forms part of ITC’s strategy to achieve US$9.25bn revenues from non-cigarette packaged-food business by 2030. ITC had set up dairy and beverages division four years ago. Given that the company has integrated food and beverage manufacturing facility at Kapurthala in the state of Punjab, milk-based beverages will be manufactured alongside flour, noodles, wafers, biscuits and fruit-based beverages, and ITC can have logistical advantage of using Punjab’s dairy supply chain.”