Milk Prices may not turn volatile this summer-Mother Dairy

Milk inflation has moderated recently. The last hike in milk prices (by Mother Dairy) was announced in February 2023. As summer progresses, natural shortage starts occurring in overall milk production. However, there will be no wild swing in prices… Summer lasts till September, when some shortage of milk naturally occurs. I anticipate slight (upward) movement in terms of prices. We sell around 5 million litres of milk daily and procure from cooperatives and producers companies mainly from Uttar Pradesh, Rajasthan, Maharashtra, Bihar, West Bengal and Andhra Pradesh. Sales of milk are increasing 8 to 10% annually.

Despite the company achieving record sales last fiscal, growth in business was slower than in FY23. What are the factors for the slow growth?

We achieved a record sales turnover last fiscal, yet year-on-year growth was marginal. Last year, summer demand was depressed because of cooler weather (during the season). Because of unseasonal rain in summer months last year, all beverage companies faced challenges. It impacted our dairy and ‘Safal’ businesses. This year, we are hoping for a delayed summer season, which would boost demand for dairy products.

Didn’t the prolonged winter help  boost milk production and supplies?

Overall flush season (when milk output increases during winter months) has been positive. We got enough and more milk in the winter months. In the international market for skimmed milk powder and butter, prices have been depressed and exports have been low, leading to private players reducing manufacturing as well as procurement. Organisations like Mother Dairy and Gujarat Cooperative Milk Marketing Federation or Amul have an obligation to buy milk from farmers. Procurement has been very high during winter months compared to the previous year. Last year, there was shortage of milk throughout the year because of occurrences of Lumpy Skin Diseases, among other factors. Exports were robust by private players.

In the current fiscal, we are aiming for robust volume sales growth. We plan to add `2,000-`2,500 crore to our FY24 turnover of `15,000 crore. In the last three years, we have added `4,000-4,500 crore, which implies 40-45% growth during the period. We have an edible oil business under the Dhara brand name, which contributes 20% to our total sales. It is growing steadily and witnessing a growth rate double than the industry category growth. We anticipate a good year with a good summer and consumer demand. The milk availability for the next winter months should be fine because of prospects of a surplus monsoon rains.

What are the steps being taken to boost sales?

We are offering 30 new products, which include 20 new ice cream variants, cookies and bread extensions like rusk. In addition, we will be launching an app-based home delivery of dairy products from milk and Safal booths. We have launched these booth-specific apps in 50 places in Delhi-NCR and aim to expand this facility to 400-500 booths, where consumers get our products delivered at the doorstep. If we succeed in this model, we will be creating more such localised apps. We have carried out a pilot and it has shown positive results.