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India’s organised dairy industry is witnessing its next phase of growth in Tier-2 and Tier-3 cities, where consumption patterns are increasingly mirroring those of metro markets. Dairy companies report that order frequencies and spending levels in several categories are now matching, and in some cases exceeding, metro benchmarks, driven by rising incomes, rapid urbanisation and growing consumer preference for branded, quality-assured dairy products. Improved cold-chain infrastructure and changing lifestyles are also encouraging consumers to move beyond liquid milk and adopt a broader range of value-added dairy products.
Packaged curd has emerged as a key growth driver, evolving from a seasonal purchase into an everyday household staple. According to K Rathnam, CEO of Milky Mist, routine-consumed products such as paneer and curd account for nearly 80% of the company’s sales revenue. He added that consumers in smaller cities are increasingly opting for premium and functional products such as Greek yogurt and probiotic curd, reflecting growing health and fitness awareness.
The trend extends beyond curd. Subhashis Basu, Chief Business Officer – Dairy and CEO of Britannia Bel Foods Pvt Ltd, noted that categories such as cheese, yogurt and dairy beverages are becoming regular components of consumers’ dairy baskets. Heritage Foods CEO Srideep Kesavan said demand for new-age and value-added dairy products is growing strongly across Tier-2 markets, although the category base remains relatively small compared to metros.
To capitalize on this opportunity, dairy companies are accelerating investments in distribution, retail penetration and cold-chain infrastructure. Milky Mist plans to deploy 55,000 cooling units over the next three financial years and add 100 new reefer and ambient trucks to strengthen product availability and distribution efficiency across emerging markets. Increased deployment of visicoolers and cold-storage facilities is also improving accessibility to premium dairy products in smaller towns.
Industry leaders believe Tier-2 and Tier-3 cities will become major growth engines for India’s dairy sector in the coming years. With rising consumer aspirations, improving infrastructure, increasing employment opportunities and growing awareness around nutrition and wellness, smaller cities are rapidly emerging as the next battleground for organised dairy companies seeking long-term growth.
Source: Dairynews7x7 12 June, 2026 Read full article here
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