It is a matter of great pride for the quick commerce sector that it is providing meaningful support to the dairy sector, which brings more than two crore farmers from more than two lakh Indian villages into its fold, in its journey of manufacture and distribution
The fast-emerging “quick commerce” sector has the potential to address this problem and yield other benefits for dairy cooperatives and consumers
Earlier this month, when the Food and Agriculture Organisation (FAO) observed “World Milk Day”, India, which contributes almost a fourth of the world’s milk production, deservingly held center stage. India’s success story as a leader in milk production is a beautiful mosaic of the success of various cooperative dairy brands across the country, each enjoying immense trust amongst the producers (farmers) and consumers in its State. Some brands even have a pan-India appeal. However, owing to distribution challenges and supply chain constraints, the unorganized sector continues to account for almost one fourth of total milk distribution. This leads to problem of milk contamination and debasement – a concern that has been highlighted previously by Food Safety and Standards Authority of India (FSSAI).
The fast-emerging “quick commerce” sector has the potential to address this problem and yield other benefits for dairy cooperatives and consumers. Quick commerce is presently a $700 million market in India, and almost a fourth of all orders placed daily have a milk component – a milk pouch, a milk carton, or a dairy product such as cheese, curd, or ghee. Almost all the milk produced comes from the organised sector, a bulk of it from cooperatives. In less than three years since it came into being, quick commerce has become a highly effective distribution channel for dairy cooperatives. Products from cooperatives are some of the highest-selling items on quick commerce platforms. In some cases, quick commerce companies are the biggest business to consumers (B2C) distribution channel for milk cooperatives. This trend is already showing an immense promise of improving the distribution and reach of dependable brands and helping reduce a consumer’s dependency on unorganised sector – where several instances of spurious milk have been found.
Many of the quick commerce companies have seen their dairy business grow by almost 100 percent in the past year alone. The cooperative dairy brands, on their part, have seen their e-commerce sales increase by 25-30 percent on these platforms. It is easy to understand why. Consumers tend to be in a hurry in the mornings and late evenings (which incidentally are the peak hours for quick commerce orders), and quick commerce offers them a way to order doodh, dahi, ghee, paneer, makhan, ice cream, and other products from trustworthy brands at reasonable prices.
The other benefit of quick commerce is that it boosts the visibility and sales of milk-based products of dairy cooperatives. While these cooperatives are known, trusted, and preferred for their milk and curd, the other products they offer – such as chocolates, sweets, processed cheese, and more – compete against the distribution and promotional might of competing brands offered by FMCG behemoths.
Quick commerce helps them overcome this disadvantage online. It has become an equaliser by providing detailed catalogues for each product category and improving visibility, recall and orders for the dairy products of cooperatives. Amul Chocolates, for instance, are one of the highest-selling stock keeping units (SKUs) in the Indian quick commerce sector, as are milkshakes, lassis, and cheese slices offered by dairy cooperatives and upcoming private dairies.
Many years ago, the great Dr. Verghese Kurien said that a successful consumer product is an object of thousands of transactions every day, where the brand name serves in lieu of a social contract – a contract that is renewed daily. The consistency of this renewal, he observed, was based on three things: quality of produce, value for money, and availability. Over the years, India’s dairy cooperatives have done an exemplary job in ensuring the first two. Quick commerce is now strengthening the third. It is a matter of great pride for the quick commerce sector that it is providing meaningful support to the dairy sector, which brings more than two crore farmers from more than two lakh Indian villages into its fold, in its journey of manufacture and distribution.
Source : Business Today July 6th 2023 by Phani Kishan Addepalli