Covid second wave will impact consumption of chilled dairy products

Ice-cream, buttermilk and flavoured milk could see some short-term demand constraints as consumers focus on essentials amid fresh round of restrictions to curb spread of covid-19, according to a report by ICICI Securities.

“Ice cream consumption will likely remain impacted due to the fear of coronavirus, reduction in out-of-home consumption and reduction in the number of functions, parties and events. The consumption of milk-based beverages such as buttermilk, lassi and flavoured milk has also been impacted due to reduction in the number of visits to retail outlets,” analysts at the brokerage firm said in a 9 April report on the dairy sector, citing these as short-term challenges for the domestic dairy market.

Analysts also flagged a slowdown in consumption of new dairy segments such as whey protein powder, custards and premium cheese variants.

Overall, the dairy sector had registered good demand in FY21 as milk and milk products are deemed essential commodities. Although companies lost out on business linked to hospitality, in-home consumption remained strong.

India’s dairy sector is vast with participation of homegrown dairy cooperatives as well as large multinationals with a good demand for milk and other dairy products such as butter, ghee and paneer.

Analysts at the brokerage said organised dairy benefited through market share gains in FY2021 and the trend is likely to sustain. Direct distribution of dairy products to large societies using own logistics and apps developed by dairy companies, and higher support to trade will help companies improve market share. Prolonged stay-at-home orders are likely to benefit consumption of tetra packs of milk and dairy whiteners, it added.

As per a report by ICICI securites published in media