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White Revolution 2.0: Time to build demand in dairy

The first White Revolution, brought to its culmination in the 70s-80s by ‘Operation Flood’ and the dairy co-operatives movement built by Dr Kurien, changed the context and the ethos of Indian dairy industry. We have come a long way since then – India is now the world’s largest milk producer, accounting for about 17 per cent of global milk production.  It is also one of the world’s largest consumers of dairy products.

The question now is what next? The Indian consumers are fast developing a mature palate in terms of taste, quality, variety and nutrition quotient of dairy products they consume. There is increasing awareness about impact of food on health, and thus increasing demand for toxin-safe environment-friendly products and practices. Fair trade, buying locally produced goods to reduce carbon footprint and ensuring welfare of farmers are no longer the topics limited to conference discussions, but active concerns of families consuming milk products.

And yet, compared to mature dairy markets from the developed world, we still see a gap in India in terms of availability of value-added, innovative dairy products and categories. A wide variety of premium-quality, flavourful, healthy and nutritious dairy products that address the needs of different customer groups are still missing from the supermarket shelves, even in tier-I cities. One of the major reasons for this gap is the need to shift our focus from the traditional back-end – the supply side – to the front-end: it’s time to focus on building demand.

Milking the opportunity for what it’s worth
In mature markets, a wide variety of high-quality dairy products occupy the shelves, providing unlimited options to the consumers in terms of form, consistency, flavours, fortification and packaging convenience. Products that address almost every imaginable consumer preference – kids, mothers, senior citizens, globetrotters, health-conscious, calorie-conscious, ethical eaters, busy executives and many more – ensure that everyone gets their choice in dairy. Over the years, these markets have been able to establish and develop niche categories in dairy, bringing innovative products to the market at a rapid pace.

This approach has made the dairy production more profitable for the farmers – as value-added milk products gain higher market share, the farmers get better pricing for their quality output, leaving them with more capital to invest in scaling up, improving yield and quality.

In India, on the other hand, the supply has scaled up but without an equivalent development in demand of value-added products – we still lag behind in producing high-quality value-added dairy. Majority of the milk we produce in India is consumed as-is, with only a small share of it used to make value-added products. Value addition in terms of processing and developing into high-value products is still very limited in scale and scope.

If we want to build a modern, flourishing dairy sector, ensure our dairy farmers benefit more and spread their wings to expand business, we need a 2-pronged strategy:

•    Demand generation for value-added dairy products across cities and towns in India
•    Encouraging innovation in product development, category building and marketing of milk products

A case for elevating the demand game
For years, dairy cooperatives and manufacturers that contributed to White Revolution have kept an unrelenting focus on building and scaling up strong supply. Understandably, this focus has enabled us to satisfy growing domestic demand for dairy, making India become a dairy production powerhouse. However, barring the ‘Doodh hai wonderful’ campaign targeted at the urban audience, the industry hasn’t prioritised demand generation as a tool for farmer profitability and elevation of quality standards in the dairy sector. Even today, it’s difficult to find major players in the sector that allocate more than 1-2 per cent of their revenues to marketing, category building and product innovation.

But, to use Bob Dylan’s words, the times are a-changing. As India’s middle class gains more purchasing power and internet-enabled global exposure, the demand side is evolving much faster than ever before. We, as an industry, need to get our arms around this shape-shifting beast and capitalize on the latent opportunity by building new categories and path-breaking products that hit the right spot for our evolving consumer.

How do we make this happen? Through a well-orchestrated, industry-wide effort. A few strategies come to mind:

•    The B2C edge: as an industry, we need to prioritize demand generation and embrace the fast-paced innovation and market-focused agility of other food and FMCG segments. Positioning dairy as healthy, nutritious, wholesome food group and building consumer awareness about variety, quality and sustainability is crucial.
•    Innovation: we must put our money where our mouth is and invest in research and development for innovative products and categories. At an institutional level, we need more investment in creating state-of-the-art research and testing facilities.
•    Quality: Evolving demand necessitates elevation of quality standards through the dairy supply chain – this can be achieved through more tech integration, improved reach through integrated supply chain and better input solutions for our farmer partners. Traceability of products, an important way consumer can ensure safety, quality and origin of the products they are consuming, needs to become ubiquitous and widely employed.
•    Embracing glo-cal: the global food megatrends are also reflected in urban India and have given rise to new popular categories like exotic cheese variants, kefir, flavoured Greek yoghurt and more. At the same time, there is an opportunity to take our evergreen desi dairy products in new directions – niftily packaged, flavoured rabdi, mishti doi, shrikhand, kheer and payasam hold the power to transform the ready-to-eat dairy segment across India.

Supportive governments hold the key
To empower the dairy industry, the central government and several state governments have taken recent steps in the right direction. Special budgetary allocation for National Dairy Development Board, steps to improve credit for dairy farmers and network of institutions for better animal health are all welcome.

The governmental support in creating the right infrastructure – such as consumer research facilities and testing labs that can assure highest standards, training and resource centres for dairy farmers, support for tech integration in dairy supply chain – will empower the dairy industry further. A national initiative to re-imagine milk in various innovative, value-added products as healthy, safe, sustainable and ‘cool’ food group, especially for the younger generation will go a long way.

While the support from governments is crucial, White Revolution 2.0 is contingent upon the dairy industry’s will and push to reinvent itself. That’s the only way to maintain and enhance India’s global leadership as a dairy powerhouse.

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