Heritage foods to increase VADP share from 37% to 50%
As the world commemorated World Milk Day on June 1, the spotlight once again turned to the vital role of dairy in ensuring nutrition security, rural employment, and economic resilience—especially in a country like India, the world’s largest milk producer. Despite rapid urbanisation and evolving consumer preferences, over half of India’s dairy market remains unorganised, presenting both a challenge and an opportunity. With increasing demand for value-added products, safer supply chains, and sustainable production practices, the Indian dairy industry is undergoing a significant transformation. From climate change to cold chain gaps and rising operational costs, stakeholders are navigating a complex landscape that demands innovation and scale. In this context, NUFFOODS Spectrum spoke to Srideep Kesavan, CEO of Heritage Foods, to explore how one of India’s top dairy players is responding to these shifts while shaping the future of organised dairy in India.
Can you shed light on the product diversification strategy of Heritage Foods beyond dairy—into value-added and ready-to-eat segments?
At Heritage Foods, we firmly believe that the opportunities within the dairy sector are immense and largely untapped. This conviction underpins our strategy to remain focused on dairy, with limited need for diversification. The Indian dairy industry is valued at approximately Rs 11 lakh crore. Of this, only about Rs 4.5 lakh crore is accounted for by organised players who comply with food safety standards, consumer protection norms, and taxation regulations. The remaining share lies with the unorganised sector, which, although rapidly shrinking, continues to attract demand despite concerns around hygiene, regulation, and quality—often including adulteration.
Within dairy, liquid milk has the highest level of consolidation, with roughly 55 per cent of the market being organised. However, in most value-added dairy categories, branded products are still a small fraction of total sales. Take paneer, for example—only 5 per cent of what is produced and sold is branded. Even in large segments like curd and ghee, branded offerings account for only 18 per cent of total volumes.
These categories are growing rapidly, fuelled by rising incomes, greater health and nutrition awareness, and most importantly, a consumer shift toward trusted, branded products. We are well-positioned to capitalise on this transformation and are sharply focused on driving it. Our goal is to increase the share of value-added dairy in our revenues from the current 37 per cent to nearly 50 per cent over the next 6–7 years.
That said, we are also selectively exploring adjacent opportunities that align with our core strengths and evolving consumer preferences. For instance, our launch of Ready-to-Eat Paneer Tikka was designed to meet the rising demand for convenient, protein-rich snacks among time-constrained urban consumers. On the occasion of our 33rd Foundation Day, we also extended our product range into traditional sweets with the launch of “Truly Good Pure Ghee Laddus” in millet, jowar, and besan variants—crafted for health-conscious consumers who seek authenticity in indulgence.
Further, we have recently committed a capital investment of Rs 204 crore to establish a state-of-the-art greenfield facility. This plant will significantly expand our presence in the fast-growing ice cream segment.
What technologies have you adopted in cold chain and logistics to maintain freshness and shelf life?
Cold chain and efficient logistics lie at the heart of any successful dairy business—and at Heritage Foods, they are among our core strengths and key differentiators.
While most associate cold chain with refrigerated trucks, a truly high-quality dairy brand requires end-to-end temperature control—from the point of milk collection to the final delivery. Our cold chain begins at the village level. With a federated supply chain network, we operate 200 chilling centers across India, linked to over 11,000 villages. We ensure that no village is more than 25 km from a chilling center, allowing raw milk to be cooled within hours of milking. This minimises bacterial load and preserves quality as it enters our plants.
Our processing facilities are strategically located near high-consumption areas, reducing transit time and enabling products like curd to reach consumers within 24–36 hours of production. We further optimise logistics using geo-spatial systems and real-time analytics to plan efficient delivery routes, track vehicle movement, and preempt disruptions. IoT-enabled devices continuously monitor temperature and humidity, ensuring products remain within ideal conditions throughout transit.
While we’ve built a robust cold chain from farm to shelf, challenges remain at the last mile. Many traditional retailers still store products at room temperature, compromising quality. One of our key initiatives is educating retail partners on the importance of maintaining cold chain standards—because only then can consumers truly experience the superior quality we strive to deliver.
What are the major challenges faced by the Indian dairy industry today, and how is Heritage Foods addressing them?
India’s dairy industry, despite being the largest globally by production, faces a complex set of challenges that hinder its full potential. At Heritage Foods, we are proactively addressing these issues through a combination of strategic investments, technology, and community engagement.
One of the foremost challenges is the low productivity of dairy animals, particularly among smallholder farmers who form the backbone of the sector. This is compounded by a fragmented supply chain and limited access to veterinary care and scientific practices. To address this, we have built robust direct procurement networks that ensure fair pricing and consistent offtake for farmers, while also offering training to enhance animal health and milk yields.
Food safety and adulteration remain serious concerns, especially within the unorganised sector, which still controls over half of the marketed milk in India. At Heritage Foods, we maintain stringent quality protocols across our supply chain. Our processing facilities are fully compliant with international safety standards, and we use technology-led monitoring to ensure that our products are safe, nutritious, and reliable.
Operational costs have been rising sharply due to inflationary pressures on feed, fuel, and logistics. In response, we have optimised our logistics through geo-spatial tools and real-time analytics, allowing us to plan more efficient delivery routes and reduce fuel consumption. Where necessary, we’ve made modest price revisions to balance cost management with continued affordability for our consumers.
Climate change is another emerging challenge, affecting both livestock health and milk productivity through increased instances of heat stress and disease outbreaks. We work closely with our farmer partners to promote preventive animal healthcare and sustainable dairy practices. In parallel, we are exploring eco-friendly packaging and energy-efficient operations to reduce our environmental footprint.
Finally, low penetration of the organised sector continues to limit access to quality dairy in many parts of the country. We see this as a significant growth opportunity and are actively expanding our footprint, including recent moves into East India. Through awareness campaigns, we are educating consumers on the nutritional benefits of dairy and the risks of unregulated supply, thereby encouraging a shift toward trusted, organised brands.
How many manufacturing units does Heritage Foods currently operate across India, and where are they located?
Right now, we operate 17 modern milk processing units across the country, with a combined processing capacity of about 2.68 million litres per day. Alongside that, we’ve got 200 chilling centres that help us handle and preserve nearly 2.28 million litres of milk daily. It’s a very extensive setup, and it gives us the logistical backbone to deliver consistently across regions.
These facilities are strategically spread out—in Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Karnataka, and even up north in Haryana. So, whether it’s our unit in Chittoor or the one in Sonipat, each is designed to support our scale.
This network is what enables us to serve over 1.5 million households every single day across 12 states. It’s the engine behind our reliability and reach—and we’re continuing to invest in strengthening it as we grow.
Can you share insights into the company’s recent revenue performance and key growth drivers?
We’ve had a strong quarter to close FY25. In Q4, our consolidated revenue stood at Rs 1,033.9 crore, which reflects a healthy 10 per cent year-on-year growth. This growth was driven by a couple of key factors. First, we saw a notable uptick in milk procurement volumes—up by 12.6 per cent to 1.84 million litres per day—which speaks to the strength of our farmer network and procurement systems. On the consumer end, milk sales volumes also increased by over 6 per cent, reaching 1.17 million litres per day.
What’s really encouraging is the continued momentum in our value-added products (VAP) segment. Revenue here grew by 17.6 per cent year-on-year, contributing over 28 per cent to our total revenue, up from 26.5 per cent in the same period last year. If you include consumer packs of ghee and butter, that contribution rises to 33.5 per cent, up from 31 per cent last year. That’s a space where we’re seeing both strong demand and high consumer stickiness.
From a profitability standpoint, we’re in a good position as well. Our EBITDA jumped 43 per cent year-on-year to Rs 74.1 crore, and net profit rose 60 per cent to Rs 43.05 crore. These numbers reflect the operational efficiencies we’ve built, including improvements in our supply chain, as well as sharper marketing execution—especially during the festive season, when demand typically peaks.
Overall, it’s a result of staying focused on our core strategy: strengthening our back-end, expanding our value-added portfolio, and delivering consistent quality that consumers can rely on.
What is your vision for the company over the next five years? Any key areas of focus for future growth?
Over the next five years, our vision is to position Heritage Foods as the most admired Dairy Nutrition brand in the country — known for our consumer-centricity and innovation, highest and world-class quality, and our commitment to the empowerment of dairy farmers and enriching their lives. While our base in South India remains strong, we’re now focused on expanding into high-growth markets like Maharashtra and the NCR region.
We’re seeing clear results from this strategy. In FY25, we achieved a 9 per cent year-on-year revenue increase, with Q4 delivering our highest-ever quarterly revenue of Rs 1,048 crore—a reflection of the momentum we built over the last several quarters. Our revenue performance has been consistent above Rs 1,000 crore per quarter throughout the last fiscal.
Looking ahead, a key pillar of growth will be value-added dairy. Products like curd, paneer, Ghee, buttermilk and flavoured milk — all of which are already contributing 37 per cent to our business—are central to meeting the evolving needs of health-conscious, convenience-seeking consumers.
We’ve also backed this strategy with significant investments. Every year, we invest close to Rs 200 Cr in Capex, a large part of which goes towards upgrading our Value added processing capacities with state-of-the-art automated lines. This year, we have augmented this with an additional Rs 204 crore in a new ice cream manufacturing facility in Hyderabad. These are critical enablers for scaling operations, improving efficiency, and expanding our product portfolio, in line with our ambition for the next five years and beyond.
In essence, we’re building for the long term—driving sustainable, consumer-led growth, underpinned by strong infrastructure and an unwavering focus on quality.
Could you tell us about Heritage Foods’ R&D infrastructure? How many R&D centres do you operate and what are their key focus areas?
We are one of the few dairy companies with a strong in-house R&D setup, anchored by a team of highly respected scientists—many of whom are well-regarded within the industry. Our investments in state-of-the-art equipment, including a lab-scale UHT plant and other advanced technologies, enable our team to develop truly innovative products.
What further sets our R&D efforts apart is our deep, collaborative partnerships—with both vendor partners and leading scientific institutions. These alliances have significantly enhanced our innovation capabilities and empowered us to bring breakthrough, world-first products to market.
How large is the workforce at Heritage Foods? How is the company addressing manpower challenges in terms of skilled labour availability and retention?
At Heritage Foods, we have a workforce of approximately 3,400 direct employees and around 3,500 indirect personnel.
What keeps our employees inspired every day is our deeply rooted sense of purpose. Our mission—“Delight every household with fresh and healthy products and empower farmers”—is not just a statement on a wall. It’s a guiding force that every individual at Heritage connects with in a tangible way through their daily work. This strong sense of purpose, coupled with core values like “deeply rooted” and “innovate from zero,” helps us attract and retain top talent in the industry.
Over the past few years, we have deliberately invested in building a future-ready organization—one that is structurally and culturally aligned to a consumer-centric, value-added dairy business. Today, our capabilities and talent pool closely resemble those of top-tier FMCG companies. In fact, several leaders who have recently joined us bring with them rich experience from leading FMCG organizations, helping accelerate our transformation.
To embed the right behaviours and sustain this momentum, we’ve developed a proprietary framework called “Winning Ways.” These growth behaviours are visibly reinforced across all our workplaces and form the foundation of how we measure and reward performance. Our Rewards & Recognition programs and talent development initiatives are all aligned to this behavioural framework.
About three years ago, we began a focused journey to elevate our workplace culture and employee experience, with the goal of becoming a Great Place to Work. We invested in building a purpose-driven, people-first environment, anchored in our “Winning Ways.” Last year, we proudly earned the Great Place to Work certification, a testament to the effectiveness of our approach and the strength of our execution.
How are you tackling issues such as milk procurement price volatility, logistics costs, and cold chain infrastructure gaps?
One of our strategies is to diversify the regions of procurement. We procure from 9 states. Even if we ignore some of the smaller regions, we are still quite diversified across the 4 states of South India as well as Maharashtra. We also procure both buffalo and cow milk. This diverse portfolio strategy allows us to hedge against risks of hyper-local volatility. The supply-demand equation across regions varies and hence this strategy of a diversified regional pool allows us to balance price movements and reduce volatility.
Another important aspect is our farmer engagement model, which is built on strong trust. What drives this trust? It comes down to three unwavering principles that have guided us for over 30 years:
- Accuracy & Transparency: Our DPU systems are calibrated every two months to ensure precise milk measurement, and farmers receive instant payment slips and real-time updates via our Vet+ app (with 120,000+ daily active users).
- Fair & Timely Payment: We pay farmers three times a month, ensuring financial stability. Over 32 years and 1,000+ payment cycles, we have never missed a payday—earning deep trust among dairy farmers.
- Farmer Support & Growth: From free vet services in 10,000+ villages to affordable loans, breed improvement programs, and subsidized high-protein feed, we empower farmers to enhance productivity and income.
While the bulk of governmental and quasi-governmental support is directed toward cooperative dairies, private dairy companies like Heritage Foods are making a significant and often underappreciated impact on rural livelihoods. Over 300,000 farmers across 11,000+ villages benefit from our extensive outreach, extension, and input support programs.
Through these initiatives, our team of veterinarians conducts free cattle health camps, supports breed improvement, offers expert guidance on ration balancing, and supplies highly nutritious, subsidized concentrated feed to farmers. These efforts are designed not only to improve animal health but also to directly enhance farmers’ incomes.
One of our core focus areas, pursued with missionary zeal, is boosting milk yield per animal—a critical lever for increasing farmer profitability. Our work in improving animal genetics and nutrition complements government programs in these domains. Going forward, stronger collaboration between private players like us and government agencies could amplify these efforts, driving greater productivity at both the animal and village household levels.
Source : DAirynews7x7 June 6th 2025- Nuffoodsspectrum by Mansi Jamsudkar