M.B.A PROGRAMME INTRODUCTION As the twentieth century draws to a close, and we enter into twenty first century. India is a celebration in diversity. Its people differ not only in the usual ways by age and gender, by race and culture, by education and occupation, by material status and living arrangements but also in their activities and interests, their preference and opinions. They differ in the music they like, the television shows they watch, the political beliefs they hold, the clothing they wear. Our society is a study in diversity. We see diversity among consumers, among marketers, among customs, among nations, even among consumer behaviour theoretical perspectives. However, despite prevailing diversity in our society, there also are many similarities. Segmenting target audiences on the basis of such similarities makes it possible for marketers to design marketing strategies with which consumers will identity. The study of consumer behaviour enables markets to understand and predict consumer behaviour in the market place, it also promotes understanding of the role that consumption plays in the lives of individuals. 1
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M.B.A PROGRAMME
INTRODUCTION
As the twentieth century draws to a close, and we enter into twenty first
century. India is a celebration in diversity. Its people differ not only in the usual
ways by age and gender, by race and culture, by education and occupation, by
material status and living arrangements but also in their activities and interests,
their preference and opinions. They differ in the music they like, the television
shows they watch, the political beliefs they hold, the clothing they wear.
Our society is a study in diversity. We see diversity
among consumers, among marketers, among customs, among nations, even
among consumer behaviour theoretical perspectives. However, despite
prevailing diversity in our society, there also are many similarities. Segmenting
target audiences on the basis of such similarities makes it possible for
marketers to design marketing strategies with which consumers will identity.
The study of consumer behaviour enables markets to
understand and predict consumer behaviour in the market place, it also
promotes understanding of the role that consumption plays in the lives of
individuals. Consumer behaviour is defined as the behaviour that consumers
display in searching for purchasing using, evaluating, and disposing of
products, services and ideas that they expect will satisfy their needs. The study
of consumer behaviour is concerned not only with what consumer buy, but also
with why they buy it, when and where and how they buy it, and how often they
buy it. It is concerned with learning the specific meanings that products hold
for consumers research takes place at every phase of the consumption process.
Before the purchase, during the purchase, and after the purchase.
Consumer, behaviour is interdisciplinary; that is,
it is based on concepts and theories about people that have been developed by
scientists in such diverse disciplines as psychology social psychology. Culture
anthropology and economics, consumer research is the methodology used to
study consumer behaviour.
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Consumer behaviour:
Consumer behaviour may be defined as the acts of
individuals in obtaining and using goods and services, including the decision
processes that precede and determine these acts this definition includes both the
ultimate consequence and the industrial users. The behaviour of these two
consumers differ a lot. A major difference in the purchasing behaviour of
industrial consumer is that addition influences can be exerted on the industrial
purchasing agent from with in the organization our approach of consumer
behaviour is to view it as a decision process and the act of purchasing is one of
the acts in the process in order to understand consumer behaviour clearly we
must understand the events from individual and environmental influences
consumer behaviour results from individual and environmental influences.
Consumer often purchase the goods and services which
they want others to accept, behaviour is therefore, determined by the
individual’s psychological makeup and the influence of others. Thus, behaviour
is the results of the interaction of the consumer personal influences and the
pressure exerted upon them by out side forces in the environment.
The study of consumer behaviour:
The study of consumer is the study of how
individuals make decisions to spend their available resources (time, money,
effort) on consumption – related items. It includes the study of what they buy,
why they buy it, and how often use it. Take the simple product toothpaste,
consumer researchers what to know that types of toothpaste consumers buy
(gel, regular, striped, in a tube, with a pump); what brand (national brand,
private brand, generic brand); why they buy it (to prevent cavities, to remove
stain, to brighten or whiten teeth, to use a mouth wash, to attract romance);
where they buy it (super market, drugstore, connivances store,) how often they
use it (when they wake up, after each meal, when they go to bed or any
combination thereof); and how often they buy it (weekly, monthly).
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Consider a more durable product, such as the fax machine. What kinds of
consumers buy fax machines for home use? What features do they look for
what benefit do they seek? What types of documents do they fax and for what
reasons? How likely they to replace their old model when new models.
Evolution of consumer behaviour
There are a number of reasons why the study of
consumer behaviour developed as a separate marketing discipline. Marketing
had long noted that consumers did not always act or react as marketing theory
suggested they would. The size of the consumer market in this county is vast
and constantly expanding. Lots of money was being spent on goods and
services by tens of millions of people. Consumer preferences were changing
and becoming highly diversified. Even in industrial markets, where needs for
goods and services were always more homogenous than in consumer markets,
buyers were exhibiting diversified preferences and less predictable purchase
behaviour.
To better meet the needs of specific groups of consumer, most
marketers adopted a policy of market segmentation, which called for the
division of their total potential markets into smaller, homogeneous segments
for which they could design specific products and or promotional companies.
They also used promotional techniques to vary the image of their products so
that they would be perceived as better fulfilling the specific needs of certain
target segments – a process not known as positioning.
Other reasons for the developing interest in consumer behaviour
included the rate of now product development, growth of the consumer
movement. Public policy concerns, environmental concerns, and the growth of
both non profit marketing and international marketing.
Indeed, a major stumbling block to many international
marketing efforts has been the general lack of familiarity with the needs,
preferences, and consumption habits of consumers in foreign markets.
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Marketers now use cross cultural consumer research studies as the basis for
product development and promotional strategies to meet the needs of targeted
foreign consumers.
Evolution of marketing concept :
The filed of consumer behaviour is rooted in the
market concept, a marketing strategy that evolved in the late 150s, after
marketers passed through a series of marketing approaches referred to as the
production concept, the production concept and the selling concept.
When world war it ended, marketers found they
could sell almost any goods they could produce to consumers who had done
without while the nations manufacturing facilities were dedicated to the
production of war material. This marketing approach is called a product
orientation. Its implicit marketing objectives are cheap, efficient product and
intensive distribution. A production orientation is a feasible marketing strategy
when consumers are more interested in obtaining the product them they are in
its specific features. When demand exceeds supply, a production orientation
com work. Consumers will buy what’s available, rather than for what really
want.
A production orientation should not be confused
with a product orientation, which assumes that consumers will buy the product
that offers them then the highest quality, the best performance, and the most
features. A product orientation leads a company to strive constantly to improve
the quality of its product, with a result often referred to as “marketing myopia”
that is, a focus on the product, rather than on the consumer needs it presumes to
satisfy. A marketers in have with its products may improve it far beyond its
worth to the consumer, passing the cost of unneeded quality or special features
on to the public. In highly competitive markets some companies keep adding
unnecessary features in hopes of attracting buyers.
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A natural evolution from both a production orientation and
a product orientation is selling orientation, which a marketers primary focus is
selling the products that it has unilaterally decided to produce. The implicit
assumption in the selling orientation is that consumers are unlikely to buy a
product unless they are actively and aggressively persuaded to do so. The
problem with a selling orientation is that it does not take consumer satisfaction
into account. When consumer are induced to buy products that they don’t want
or need, any resulting unhappiness is likely to be communicated through
negative word – of – mouth that may dissuade other potential consumers from
making a similar purchase. Further more, when the product does not fulfill a
consumer need, it is unlikely that a repeat purchase will be forth coming.
It the late 1950’s some markers began to realize that they
could more goods, more easity, if they produced only those goods that they had
predetermined consumers would buy. Instead of trying to persuade customers
to buy what they had already produced, marketing oriented firms endeavored to
produce only products that they had first and wants became the firm[‘s primary
focus. This consumer – oriented marketing philosophy came to be known as
the marketing concept. The they assumption underlying the marketing concept
is based on the premise that a marketer should make what it can sell, instead of
trying to sell what it can sell, instead of trying to sell what is has made. While
the selling concept focused on the needs of the seller the marketing concept
focuses squarely on the needs of the buyer the wide spread adoption of the
marketing concept by American business provided the impetus for the study of
consumer behaviour to identify unsatisfied consumer needs.
Consumer behaviour and marketing management
Effective business managers realize the importance of
marketing to the success of their firm. Marketing may be defined as:
The process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and services to create exchanges
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that satisfy individual and organizational objectives, a sound understanding of
consumer behaviour is essential to the long-run success of any marketing
program. In fact, it is seen as a cornerstone of the marketing concept, an
important orientation of philosophy of many marketing managers, the essence
of the marketing concept is captured in three interrelated orientation.
Company objectives:
Consumers want and needs are numerous, therefore, a firm
that concern tract is on satisfying a small proportion of all desires will most
effectively utilize its resources. Company objectives and any of the firm’s
special advantages are used as criteria to select the specific wants and needs to
be addressed.
Integrated strategy
An integrated effort is most effective in achieving a firm’s
objectives through consumers satisfaction for maximum impact their requires
that marketing efforts be closely co-ordinate and compatible with each other
and with other activities of the firm.
Every markets has to study consumer markets and
behaviour prior to developing it marketing plan. This enables marketers to
under standing who constitutes the market, what and why the market buys, who
participates in the buying, and now when, and where the market buys.
It is important for marketers and future marketers to
recognize why and how individuals make their consumption decisions, their
consumption decisions, so that they can make better strategic marketing
decisions, if marketers understand consumer behaviour, they are able to predict
how consumers are likely to react to various informational and environmental
cues, and are able to shape their marketing strategies according without doubt,
marketing who understand consumer behaviour have great competition
advantage in the market place.
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Analyzing consumer markets and buyer behaviour
The aim of marketing is to meet and satisfy
customer’s needs and wants the field of consumer behaviour studies how
individuals, groups and organization select, buy, use, dispose of goods,
services, ideas, or experiences to satisfy their needs and desire understanding
consumer behaviour and “knowing customers” are never simple. Customers
may say one thing but do another. They may not be in touch with their deepa
motivation. They may respond to influences that change their mind at the last
minute.
Before developing their marketing plans marketing
need to study consumer market and consumer behaviour. In analyzing
consumer markets firm need to research who constitutes the market. What the
market buys, why the market buys, who participates in the buying, how the
market buys, when the market buys, and where the market buys, and where the
market buys.
Consumer behaviour is influenced by four factors,
cultural (culture, subculture, and social class); social (reference groups, family,
and social roles and statues,); personal (age, stage in the life cycle, sex,
occupation, economic circumstances, life style, personality and self – concept);
and psychological (motivation, perception, learning, beliefs, and attitudes).
Research into all these factors can provide clues as to how to reach and serve
consumers more effectively.
The Indian consumer market consists of more then 1
billion people who consume many crore rupees worth of goods and serveices
each other making it one of the most attractive consumer markets in the
world .the world consumer market consists of more than 6.5 billion
people .consumers around the world .very greatly the age
income ,education ,level ,and tastes ,understanding how these differences affect
consumer buying behaviour is one of the biggest challenges marketers face.
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Stages in buyer decision process
When making a purchase the buyer goes through a
decision process consisting of need recognition .information search ,and
evaluation of alternatives ,perchase decision .and post purchase behaviour –the
marketers job is to understand the buyers behaviour at each stage and the
influences that are operating .during need recognition .the consumer
recognizes a problems or need that could be satisfied by a product of secure in
the market.
Once the need is recognized ,the consumer is around to
such more information and moves into the information search stage .with
information search stage with information in hand the consumer proceeds to
alternative evaluation ,during which the information is used to evaluate brands
in the choice set. from there, the consumer makes a purchase decision and
actually buys the product .then the final stage of the buyer decision process ,
post-purchase behaviour , the consumer takes action based on satisfaction or
dis satisfaction.
Adoption and diffusion process
The product adoption process is compressed of five stages . a
awareness interest , evaluation trail and adoption .initially , the consumer must
became aware of the new product . awareness leads to interest ,and the
consumer enters the evaluation stages and consideration buying the new
product. Next in the trail stage his or her estimate of its value . if the consumer
is satisfied with the product .he or she enters the adoption stage deciding to use
the new product fully and regularly .with regarded to diffusion of new
product fully and regularly . with regarded to diffusion of new products.
consumers characteristics and the products characteristics .consumer may be
innovators or loggias innovators.
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Statement of the problem
Every output produce by the manufacture should
finally reach the customers so the customer is the sovereign of the market and
his satisfaction should be given lot of importance. But in majority of the cases,
the manufactures are not directly dealing with the customers and they are
delegating this job to the marketing intermediaries. In other words, the
manufactures are building distribution mechanism excepting direct
involvement in marketing the important intermediaries are distributors, dealers,
stockiest, whole sellers and retailers, etc.
Though there are good number of member are
involving in the distribution process, only few of them are having close
association and interaction with the customers, viz., whole sellers and retailers.
So, the retailers are the people having very good interaction with the customer
and they are able to asses the customer very easily without maintain the direct
contact with the customer, understanding the customer and his plight as well as
competitors position in the market is almost all impossible to the manufactures.
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OBJECTIVE OF THE STUDY
Primary objective:
1. Finding the consumer behavior towards Vijaya Dairy.
2. To know the consumers satisfaction level towards quality & durability
of Vijaya Dairy.
3. To know the consumers satisfaction level towards price & service after
sales of Vijaya Dairy.
4. To analyze most influencing factor of the customer to purchase the
Vijaya Dairy.
Secondary objective:
To study the consumer’s opinion about the promotional offers practiced
by the company.
To identify the consumer awareness on Vijaya Dairy advertisement.
To know the purpose of purchase.
To know the level of consumer satisfaction towards availability &
transportation of Vijaya Dairy.
To know the consumer awareness on other brands.
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SCOPE OF THE STUDY
1. The questionnaire survey can help researches to get the supplementary
opinions and information which help him to write the research report in
more detailed and scientific way.
2. To the best of research knowledge many customers are not aware of
bright image and brand loyalty, price concessions and quality of the soft
drinks and this report could be of use to publicize this information
3. Creating a future customer base may offer to improve more brand image
consumession etc.
4. The scope of this study is data limited to the organization only
5. When the focus is on identifying and satisfying the wants and needs of
consumers,
6. the intention of the firm is not seen as merely providing goods and services.
7. Instead, want and need satisfaction is viewed as the purpose, and providing
products and services is the many to achieve that end.
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METHODOLOGY OF THE STUDY
The data collection methods include both the primary and
secondary collection methods.
Primary data collection method:
The data, which is collected fresh for a specific purpose
in hand. Communication and observation are two basic means of obtaining
primary data collecting method. Communication involves the questioning of
respondent to secure the desired information using a data collecting
instruments. Called questionnaire in this research I used structured
questionnaire for collecting primary data collection method.
Secondary data collection method
hose data that have already been collected by some one
else about the product, about the industry etc., for instance in this study
secondary data was collocated from company brochures, annual reports, and
previous research, company website, www.tulasimilk productspvtltd.com
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Sampling data
Sampling:
An integral component of a research design is the sampling plan.
Specifically it addresses three question whom to the survey how many to
survey.
Deciding whom to survey requires that the universe or boundaries
of the market from which data is sought be defined so that an appropriated
sample can be selected inter viewing the correct target market or market or
potential target market is basic to the validity of the study.
Sample frame:
After defining the population the second step, is developing
the sample frame, in may defined as the listing of the components of the
individuals units that companies the defined population.
Sampling procedure:
It feels about how the respondents should be chosen. The
sampling procedure that adopted is non – probability sampling. It is specially
“convenience sampling”
Size of the sample:
The size of the sample is dependent both on the size of the
budget and the degree of confidence that the marketers wants to place in the
findings the larger the sample the sample size selected was 120 respondents.
The study area is restricted to guntur.
Data analysis:
The collected data is tabulated and then analyzed by using simple
parentage and represented by different types of groups
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SIGNIFICANCE OF THE STUDY
Studying consumer behavior provides clues for
improving or introducing products or services, setting prices, devising
channels, and developing other marketing activities. Marketers are always
looking for emerging trends that suggest new marketing opportunities.
Today's global companies spending huge
amount of money to conduct consumer research. For this purpose they have the
special departments like Research and Development. These global companies
keep on doing research on the products and their customers.
From research and surveys companies
get the true picture of its standing in the market. According to the consumers'
feedback they further develop and improve their products. For consumer it is
an advantage that the company gives respect to his views and attitude and
brings changes in the products accordingly.
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NEED FOR THE STUDY
The study is conducted for the following needs
To know various procedure and patterns followed for computation of
consumer behaviuour in the organization.
To have a personnel exposure by visiting the organization for many
times.
To develop the communication skill by preparing the project report.
To study the role of consumer behaviour and application in the
organization.
To know more information about the consumer behaviour both
theoretically and partially.
Consumes wants and needs:
When the focus is on identifying and satisfying
the wants and needs of consumers, the intention of the firm is not seen as
merely providing goods and services. Instead, want and need satisfaction is
viewed as the purpose, and providing products and services is the many to
achieve that end.
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LIMITATION OF STUDY
1. The selected sample members are conspicuous and the conspicuous in
nature .so, there is a chance to arise some errors in the course of survey
2. The errors may be as follows
3. Respondents may not disclose the sight information because the
research is very stranger to the research even thought it is very
stranger to them
4. The respondents may give pleasing answer to the research even
thought it is not correct from their respective
5. Since a sample size is small a perfect mix of the respondents may not
be available for the research to conduct the opinion survey
6. Some respondents may give out vague answer to the questions and
there by restricting us from including them in the survey .
7. The duration of the study for two months is constraint to achieve of
Milk products .
8. Collection of current data is also a limiting factor because of
confidentially.
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INDUSTRY PROFILE
INTRODUCTION TO INDIAN MILK INDUSTRY:
Dairying has been of life in India since the ancient Vedic times. The
modern dairy industry took roots in 1950 with the sale of bottled milk in
Bombay from Array milk colony. The first large scale milk products factory
was started in 1945 at Anand a Co-operative venture, with the assistance of
UNICEF, for the production of milk powder, table butter and ghee. These
products were making from the buffalo milk.
The world’s largest development program over undertaken, the
operation flood undertook and gigantic task of upgrading and modernizing with
production, procurement, processing and marketing with the assistance
provided by the World Bank and other external agencies, designed and
implemented by the National Dairy Development Board (NDBD) and the
Indian Dairy Corporation. The project was launched in July, 1970. Its basic
concept compromises the establishment of co-operative structure on Ananda
Pattern.
OPERATION FLOOD-1:
Operation flood-1 also referred to as while revolution in a gigantic
project profounder by Government of India for developing Dairy Industry in
the country. The Operation Flood-2 originally meant to be completed in 1975
for its completion at total cost of about Rs.116 Crores. The Operation Flood-2
was wholly financed by setting in India free metric tons of bottle oil donated
out of the surpluses of European Economic Community.
ANAND PATTERN-1:
Under the Operation Flood-1 the program for increasing milk
production was taken up in ice hinterlands of various breading tracks on Anand
Pattern and loudly proclaimed with a trample. The Co-operative were started
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originally in 18 of Indian Milk shed districts and later on mine more milk shed
areas were added to make a total of 27 in 10 states of the country viz.,
Maharashtra, Tamilnadu, Andhra Pradesh, West Bengal, Bihar, Haryana,
Punjab, Uttar Pradesh and Rajasthan.
These dairy co-operative are based on the model known as Anand
Pattern of dairy co-operative. Under Anand pattern concept rural co-operative
infrastructure was to be built in the village, the milk producers were to form
their own village dairy co-operative. In the sphere of co-operativisation the No.
of Anand Pattern organized societies under operation flood was 63121 on April
1st 1991 as age INST 6753 a year ago indicate one that years as many as 2368
new dairy co-operatives were formed.
OPERATION FLOOD-2:
The Operation Flood-2 which was started in July 1978 is scheduled to
be completed in 1985 at a cost of 483 crores. The Indian Dairy co-operative,
National possible are not required to indicate the basis on which the State wise
allocation were made in operation flood-2 up to end of the 11,1979 Gujarat
State alone got the lion’s shares of 1666. 70,00,000 five sate Haryana, Bihar,
Rajasthan and Andhra Pradesh put together the total disbursement in their case
was 1732 lakhs only. This trend is going to be maintained in Operation Flood2.
OPERATION FLOOD-3:
The Indian Dairy Industry is growing rapidly and may become a string
competitor to World Dairy Powder. The milk sector in the second largest
contribution to the agricultural economy in terms of produce phenomenal
growth is a result of national airy development board through the Operation
Flood programs.
Operation Flood-2 now in its closing phase only consolidated the
procurement affords to boost production. The projection for milk output for
200 AD is nearly 90 tones at on5% growth rate. It is now 5-8% dairy factories
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established under operation flood, which cover 170 milk sheds can handle 14.3
million liters milk dairy. They have a milk drying capacity of about 696 tons
per day. The rapid growth in milk powder except for a (26400 tones) during the
drought years.
NATIONAL DAIRY DEVELOPMENT BOARD:
At the time of industrialization at cattle feed factory at Knjari in October’ 1964
the late Sri LAL BAHADUR SASTRY, the Prime Minister of India paid
unscheduled visit producer’s co-operative societies and stated there overnight.
He was impressed by the social economic changes brought milk co-operative in
Krishna District and desired to have a National level organization to milk
producers co-operative societies replicate anansin other part of the Country.
Thus the National Dairy Development Board was sent up under the
empowerment of Ministry of Agriculture and Irrigation, Govt. Of India in
September’1965 under the Society Registration Act.1860 and the Bombay
Trust Act.1950. The president of India nominates the Board of Directors
including Chairman, Secretary, and National Dairy Development Board in the
chief of the organization.
ANAND PATTERN DAIRY DEVELOPMENT:
The information Anand pattern of milk co-operative was launched with
the organization of Krishna District co-operative Milk Producer’s Union
Limited. In this pattern the function of dairy is milk procurement, processing
and marketing are controlled by the milk producers themselves.
PLANNING INVESTMENT:
1. 33.43 Crores
2. 247.53 Crores
3. 187.00 Crores
4. 349.00 Crores
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5. 116.00 Crores
6. 600.00 Crores
Indian dairy Industry - a profile
Today, India is 'The Oyster' of the global dairy industry. It offers
opportunities galore to entrepreneurs worldwide, who wish to capitalize on one
of the world's largest and fastest growing markets for milk and milk products.
A bagful of 'pearls' awaits the international dairy processor in India. The Indian
dairy industry is rapidly growing, trying to keep pace with the galloping
progress around the world. As he expands his overseas operations to India
many profitable options await him. He may transfer technology, sign joint
ventures or use India as a sourcing center for regional exports. The
liberalization of the Indian economy beckons to MNC's and foreign investors
alike.
India’s dairy sector is expected to triple its production in the next 10
years in view of expanding potential for export to Europe and the West.
Moreover with WTO regulations expected to come into force in coming years
all the developed countries which are among big exporters today would have to
withdraw the support and subsidy to their domestic milk products sector. Also
India today is the lowest cost producer of per litre of milk in the world, at 27
cents, compared with the U.S' 63 cents, and Japan’s $2.8 dollars. Also to take
advantage of this lowest cost of milk production and increasing production in
the country multinational companies are planning to expand their activities
here. This will help them in marketing their products in foreign countries in
processed form.
The urban market for milk products is expected to grow at an
accelerated pace of around 33% per annum to around Rs.43,500crores by year
2013. This growth is going to come from the greater emphasis on the processed
foods sector and also by increase in the conversion of milk into milk products.
By 2013., the value of Indian dairy produce is expected to be Rs 10,00,000
million. Presently the market is valued at around Rs7,00,000mn
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Background:
India with 134mn cows and 125mn buffaloes has the largest population
of cattle in the world. Total cattle population in the country as on October'00
stood at 313mn. More than fifty percent of the buffaloes and twenty percent of
the cattle in the world are found in India and most of these are milch cows and
milch buffaloes.
Indian dairy sector contributes the large share in agricultural gross
domestic products. Presently there are around 70,000 village dairy cooperatives
across the country. The co-operative societies are federated into 170 district
milk producers unions, which is turn has 22-state cooperative dairy federation.
Milk production gives employment to more than 72mn dairy farmers. In terms
of total production, India is the leading producer of milk in the world followed
by USA. The milk production in 1999-00 is estimated at 78mn MT as
compared to 74.5mn MT in the previous year. This production is expected to
increase to 81mn MT by 2000-01. Of this total produce of 78mn cows' milk
constitute 36mn MT while rest is from other cattle.
Milk Yield comparison:
Country Milk Yield (Kgs per year)
USA 7002
UK 5417
Canada 5348
New Zealand 2976
Pakistan 1052
India 795
World (Average) 2021
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Production of milk in India
22
Year Production in million MT
2001-02 48.4
2002-03 51.4
2003-04 53.7
2004-05 56.3
2005-06 58.6
2006-07 61.2
2007-08 63.5
2008-09 65
2009-10 68.5
2010-11 70.8
2011-12 74.7
2012-13 78.1
2013-14 81.0
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World's major milk producers
(Million MTs)
Country 1997-981998-99
(Approx.)
India 71 74.5
USA 71 71
Russia 34 33
Germany 27 27
France 24 24
Pakistan 21 22
Brazil 21 27
UK 14 14
Ukraine 15 14
Poland 12 12
New Zealand 11 12
Netherlands 11 11
Italy 10 10
Australia 9 10
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Operation Flood
The transition of the Indian milk industry from a situation of net import
to that of surplus has been led by the efforts of National Dairy Development
Board's Operation Flood. programme under the aegis of the former Chairman
of the board Dr. Kurien. Launched in 1970, Operation Flood has led to the
modernization of India's dairy sector and created a strong network for
procurement processing and distribution of milk by the co-operative sector. Per
capita availability of milk has increased from 132 gm per day in 1950 to over
220 gm per day in 1998. The main thrust of Operation Flood was to organize
dairy cooperatives in the milk shed areas of the village, and to link them to the
four Metro cities, which are the main markets for milk. The efforts undertaken
by NDDB have not only led to enhanced production, improvement in methods
of processing and development of a strong marketing network, but have also
led to the emergence of dairying as an important source of employment and
income generation in the rural areas. It has also led to an improvement in
yields, longer lactation periods, shorter calving intervals, etc through the use of
modern breeding techniques.
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Per Capital availability of milk
Fresh Milk
Over 50% of the milk produced in India is buffalo milk, and 45% is cow
milk. The buffalo milk contribution to total milk produce is expected to be 54%
in 2000. Buffalo milk has 3.6% protein, 7.4% fat, 5.5% milk sugar, 0.8% ash
and 82.7% water whereas cow milk has 3.5% protein, 3.7% fat, 4.9% milk
sugar, 0.7% ash and 87% water. While presently (for the year 2000) the price
of Buffalo milk is ruling at $261-313 per MT that of cow is ruling at $170-267
25
Year gm/day
1999-2000 132
2000-01 127
2001-02 113
2002-03 111
2003-04 128
2004-05 178
2005-06 192
2006-07 198
2007-08 200
2008-09 202
2009-10 203
2010-11 212
2011-12 225
2012-13 250
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per MT. Fresh pasteurized milk is available in packaged form. However, a
large part of milk consumed in India is not pasteurized, and is sold in loose
form by vendors. Sterilized milk is scarcely available in India.
Packaged milk can be divided according to fat content as follows,
Whole (fullcream) milk - 6% fat
Standardized(toned) milk - 4.5% fat
Doubled toned (lowfat) milk - 3% fat
Another category of milk, which has a small market is flavoured milk.
The Indian Market - A PyramidConsumer Habits And Practices
Milk has been an integral part of Indian food for centuries. The per
capita availability of milk in India has grown from 172 gm per person per day
in 1972 to 182gm in 1992 and 203 gm in 1998-99.This is expected to increase
to 212gms for 1999-00.
In India about 46 per cent of the total milk produced is consumed in
liquid form and 47 per cent is converted into traditional products like cottage
butter, ghee, paneer, khoya, curd, malai, etc. Only 7 per cent of the milk goes
into the production of western products like milk powders, processed butter and
processed cheese. The remaining 54% is utilized for conversion to milk
products. Among the milk products manufactured by the organized sector some
of the prominent ones are ghee, butter, cheese, ice creams, milk powders,
malted milk food, condensed milk infants foods etc. Of these ghee alone
accounts for 85%.
While for cooperatives of the total milk procured 60% is consumed in
fluid form and rest is used for manufacturing processed value added dairy
products; for private dairies only 45% is marketed in fluid form and rest is
processed into value added dairy products like ghee, makhan etc.
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Still, several consumers in urban areas prefer to buy loose milk from
vendors due to the strong perception that loose milk is fresh. Also, the current
level of processing and packaging capacity limits the availability of packaged
milk.
The preferred dairy animal in India is buffalo unlike the majority of the
world market, which is dominated by cow milk. As high as 98% of milk is
produced in rural India, which caters to 72% of the total population, whereas
the urban sector with 28% population consumes 56% of total milk produced.
Even in urban India, as high as 83% of the consumed milk comes from the
unorganized traditional sector.
Presently only 12% of the milk market is represented by packaged and
branded pasteurized milk, valued at about Rs. 8,000 crores. Quality of milk
sold by unorganized sector however is inconsistent and so is the price across
the season in local areas. Also these vendors add water and caustic soda, which
makes the milk unhygienic.
Growing Volumes
The effective milk market is largely confined to urban areas, inhabited
by over 25 per cent of the country's population. An estimated 50 per cent of the
total milk produced is consumed here. By the end of the twentieth century, the
urban population is expected to increase by more than 100 million to touch 364
million in 2000 a growth of about 40 per cent. The expected rise in urban
population would be a boon to Indian dairying. Presently, the organized sector
both cooperative and private and the traditional sector cater to this market.
The consumer access has become easier with the information revolution.
The number of households with TV has increased from 23 million in 1989 to
45 million in 1995. About 34 per cent of these households in urban India have
access to satellite television channel.
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M.B.A PROGRAMME
Potential for further growth
Of the three A's of marketing - availability, acceptability and
affordability, Indian dairying is already endowed with the first two. People in
India love to drink milk. Hence no efforts are needed to make it acceptable. Its
availability is not a limitation either, because of the ample scope for increasing
milk production, given the prevailing low yields from dairy cattle. It leaves the
third vital marketing factor affordability. How to make milk affordable for the
large majority with limited purchasing power? That is essence of the challenge.
One practical way is to pack milk in small quantities of 250 ml or less in
polythene sachets. Already, the glass bottle for retailing milk has given way to
single-use sachets which are more economical.
Marketing Strategy for 2000 AD
Two key elements of marketing strategy for 2000 AD are: Focus on
strong brands and, product mix expansion to include UHT milk, cheese, ice
creams and spreads. The changing marketing trends will see the shift from
generic products to the packaged quasi, regular and premium brands. The
national brands will gradually edge out the regional brands or reduce their
presence. The brand image can do wonders to a product's marketing as is
evident from the words of Perfume Princess Coco Channel: In the factory, we
pack perfume; in the market, we sell hope!
Emerging Dairy Markets
Food service institutional market: It is growing at double the rate of
consumer market
Defense market: An important growing market for quality products at
reasonable prices
Ingredients market: A boom is forecast in the market of dairy products
used as raw material in pharmaceutical and allied industries
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M.B.A PROGRAMME
Parlour market: The increasing away-from-home consumption trend
opens new vistas for ready-to-serve dairy products which would ride
piggyback on the fast food revolution sweeping the urban India.
India, with her sizable dairy industry growing rapidly and on the path of
modernization, would have a place in the sun of prosperity for many decades to
come. The one index to the statement is the fact that the projected total milk
output over the next 15 years (1995-2010) would exceed 1457.6 million tones
which is twice the total production of the past 15 years!
Penetration of milk products
Western table spreads such as butter, margarine and jams are not very
popular in India. All India penetration of butter/ margarine is only 4%. This is
also largely represented by urban areas, where penetration is higher at 9%. In
rural areas, butter/ margarine have penetrated in 2.1% of households only. The
use of these products in the large metros is higher, with penetration at 15%.
Similarly, penetration of ghee is highest in medium sized towns at
37.2% compared to 31.7% in all urban areas and 21.3% in all rural areas. The
all India penetration of ghee is 24.1%. In relative terms, penetration of ghee is
significantly higher in North and West, which are milk surplus regions. North
accounts for 57% of ghee consumption and West for 23%, South & East
together account for the balance 20%. A large part of ghee is made at home and
by small/ cottage industry from milk. The relative share of branded products in
this category is very low at around 1-2%.
Milk powder and condensed milk have not been able to garner any
significant consumer acceptance in India as indicated by a very low 4.7%
penetration. The penetration is higher at 8.1% in urban areas and lower at 3.5%
in rural areas. Within urban areas, it is relatively higher in medium sized towns
at 8.5% compared to 7.7% in large metros.
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Market Size And Growth
Market size for milk (sold in loose/ packaged form) is estimated to be
36mn MT valued at Rs470bn. The market is currently growing at round 4% pa
in volume terms. The milk surplus states in India are Uttar Pradesh, Punjab,
Haryana, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and
Tamil Nadu. The manufacturing of milk products is concentrated in these milk
surplus States. The top 6 states viz. Uttar Pradesh, Punjab, Madhya Pradesh,
Rajasthan, Tamil Nadu and Gujarat together account for 58% of national
production.
Milk production grew by a mere 1% pa between 1947 and 1970. Since
the early 70's, under Operation Flood, production growth increased
significantly averaging over 5% pa. About 75% of milk is consumed at the
household level which is not a part of commercial dairy industry. Loose milk
has a larger market in India as it is perceived to be fresh by most consumers. In
reality however, it poses a higher risk of adulteration and contamination.
30
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Major Players
The packaged milk segment is dominated by the dairy cooperatives.
Gujarat Co-operative Milk Marketing Federation (GCMMF) is the largest
player. All other local dairy cooperatives have their local brands (For e.g.
Gokul, Warana in Maharashtra, Saras in Rajasthan, Verka in Punjab, Vijaya in
Andhra Pradesh, Aavin in Tamil Nadu, etc). Other private players include J K
Dairy, Heritage Foods, Indiana Dairy, Dairy Specialties, etc. Amrut Industries,
once a leading player in the sector has turned bankrupt and is facing
liquidation.
Packaging Technology
Milk was initially sold door-to-door by the local milkman. When the
dairy co-operatives initially started marketing branded milk, it was sold in glass
bottles sealed with foil. Over the years, several developments in packaging
media have taken place. In the early 80's, plastic pouches replaced the bottles.
Plastic pouches made transportation and storage very convenient, besides
reducing costs. Milk packed in plastic pouches/bottles have a shelf life of just
1-2 days, that too only if refrigerated. In 1996, Tetra Packs were introduced in
India. Tetra Packs are aseptic laminate packs made of aluminum, paper, board
and plastic. Milk stored in tetra packs and treated under Ultra High
Temperature (UHT) technique can be stored for four months without
refrigeration. Most of the dairy co-operatives in Andhra Pradesh, Tamil Nadu,
Punjab and Rajasthan sell milk in tetra packs. However tetra packed milk is
costlier by Rs5-7 compared to plastic pouches. In 1999-00 Nestle launched its
UHT milk. Amul too re-launched its AmulTaaza brand of UHT milk. The UHT
milk market is expected to grow at a rate of more than 10-12% in coming
years.
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Export Potential
India has the potential to become one of the leading players in milk and
milk product exports. Location advantage: India is located amidst major milk
deficit countries in Asia and Africa. Major importers of milk and milk products
are Bangladesh, China, Hong Kong, Singapore, Thailand, Malaysia,
Philippines, Japan, UAE, Oman and other gulf countries, all located close to
India.
Low Cost of Production: Milk production is scale insensitive and labour
intensive. Due to low labour cost, cost of production of milk is significantly
lower in India.
Quality: Significant investment has to be made in milk procurement,
equipments, chilling and refrigeration facilities. Also, training has to be
imparted to improve the quality to bring it up to international standards.
Productivity: To have an exportable surplus in the long-term and also to
maintain cost competitiveness, it is imperative to improve productivity of
Indian cattle.
India's exports of milk products
Description
(Quantity, M T.:
Value, Rs.
millions)
2010-11 2011-12 2012-13
Quantity Value Quantity Value Quantity Value
Skimmed milk
powder4,638.62 3,35.32 282.70 19.64 5.00 0.375
Milk and Milk
Food for babies8.27 2.019 111.37 4.27 11.00 2.02
Milk cream 332.23 28.04 1.00 0.084 - -
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Sweetened
condensed milk41.73 2.84 9.22 0.97 60.39 7.22
Whey 78.46 3.75 11.50 1.01 6.00 0.342
Ghee/Butter/Butter
oil7,895.08 431.1 299.97 19.2 4,352.08 2,38.95
Cheese
(a) Fresh 0.10 0.013 - - - -
(b) Processed 5.67 1.20 2.1 0.375 22.10 2.19
(c) Other 66.64 8.35 36.78 0.69 24.84 4.55
TOTAL - 8,72.7 - 52.4 - 2,55.6
The Indian Dairy Industry is Offers to Foreign Investors
India is a land of opportunity for investors looking for new and
expanding markets. Dairy food processing holds immense potential for high
returns. Growth prospects in the dairy food sector are termed healthy,
according to various studies on the subject.
An entrepreneur's participation is likely to provide attractive returns on the
investment in a fast growing market such as India, along with an export
potential in the Middle East, Singapore, Malaysia, Indonesia, Korea, Thailand,
Hong Kong and other countries in the region.
Among several areas of potential participation by NRIs and foreign
investors, the following list outlines a few promising opportunities:
Biotechnology:
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Dairy cattle breeding of the finest buffaloes and hybrid cows
Milk yield increase with recombinant somatotropin
Recombinant chymosin, acceptable to vegetarian consumers
Dairy cultures, probiotics, dairy biologics, enzymes and coloring materials for food processing
Fermentation derived foods and industrial products alcohol, citric acid, lysine, flavor preparations, etc.
Biopreservative ingredients based on dairy fermentation, viz., Nisin, pediococcin, acidophilin, bulgarican contained in dairy powders.
Dairy/food processing equipment:
Potential exists for manufacturing and marketing of cost competitive food
processing machinery of world-class quality.
Food packaging equipment:
Opportunities lie in the manufacturing of both machinery and packaging
materials that help develop brand loyalty and a clear edge in the marketing of
dairy foods.
Distribution channels:
For refrigerated and frozen food distribution, a world class cold chain
would help in providing quality assurance to the consumers around the region.
Retailing:
There is scope for standardizing and upgrading food retailing in major
metropolitan cities to meet the shopping needs of a vast middle class. This area
includes grocery stores of European and North American quality, warehousing
and distribution.
Product development:
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M.B.A PROGRAMME
Dairy foods can be manufactured and packaged for export to countries
where Indian food enjoys basic acceptance. The manufacturing may be
carried out in contract plants in India. An option to market the products
in collaboration with local establishments or entrepreneurs can also be
explored. Products exhibiting potential include typical indigenous dairy
foods either not available in foreign countries or products whose
authenticity may be questionable. Gulabjamuns, Burfi, Peda, Rasagollas,
and a host of other Indian sweets have good business prospects.
Products typically foreign to India but indigenous to other countries
could also be developed for export.
Ingredient manufacture:
Export markets for commodities like dry milk, condensed milk, ghee and
certain cheese varieties are well established. These items are utilized as
ingredients in foreign countries. These markets can be expanded to include
value-added ingredients like aseptically packaged cheese sauce and dehydrated
cheese powders.
Cheese sauce: Canned cheese sauce is made from real cheese to which
milk, whey, modified food starch, vegetable oil, colorings and spices
may be added. Cheese sauce is useful in kitchens for the preparation of
omelet, sandwiches, entrees, and soups. In addition, cheese sauce is used
as a topping on potatoes and vegetables and may be incorporated in
pasta dishes.
Cheese powders: Cheese powders are formulated for dusting or
smearing of popular snacks like potato chips, crackers, etc. They impart
flavor and may be blended with spices.
Technology-driven manufacturing units:
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These plants would fulfill an essential need by providing a centralized
and specialized facility for hire by the units which cannot justify capital
investment but do need such services. Potential areas for state-of-the-art
contract-pack units may conceivably specialize in cheese slicing, or dicing line,
cheese packaging, butter printing, and aseptic packaged fluid products..
Indian (traditional) Milk Products:
There are a large variety of traditional Indian milk products such as
Makkhan -unsalted butter.
Ghee - butter oil prepared by heat clarification, for longer shelf life.
Kheer - a sweet mix of boiled milk, sugar and rice.
Basundi - milk and sugar boiled down till it thickens.
Rabri - sweetened cream.
Dahi - a type of curd.
Lassi - curd mixed with water and sugar/ salt.
Channa/Paneer - milk mixed with lactic acid to coagulate.
Khoa - evaporated milk, used as a base to produce sweet Consumers while
purchasing dairy products look for freshness, quality, taste and texture, variety
and convenience. Products like Dahi and sweets like Kheer, Basundi, Rabri are
perishable products with a shelf life of less than a day. These products are
therefore manufactured and sold by local milk and sweet shops. There are
several such small shops within the vicinity of residential areas. Consumer
loyalty is built by consistent quality, taste and freshness. There are several
sweetmeat shops, which have built a strong brand franchise, and have several
branches located in various parts of a city.
Branding Of Traditional Milk Products
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Among the traditional milk products, ghee is the only product, which is
currently marketed, in branded form. main ghee brands are Sagar, MilkMan
(Britannia), Amul (GCMMF), Aarey (Mafco Ltd), Vijaya (AP Dairy
Development Cooperative Federation), Verka ( Punjab Dairy Cooperative),
Everyday (Nestle) and Farm Fresh (Wockhardt).
GCMMF has also made a beginning in branding of other traditional
milk products with the launch of packaged Paneer under the Amul brand. It has
also created a new umbrella brand "AmulMithaee", for a range of ethnic Indian
sweets that are proposed to be launched The first new product
AmulMithaeeGulabjamun has already been launched in major Indian markets.
Western Milk Products
Western milk products such as butter, cheese, yogurt have gained
popularity in the Indian market only during the last few years. However
consumption has been expanding with increasing urbanization.
Butter
Most Indians prefer to use home made white butter (makkhan) for
reasons of taste and affordability. Most of the branded butter is sold in the
towns and cities. The major brands are Amul, Vijaya, Sagar, Nandini and
Aarey. Amul is the leading national brand while the other players have greater
shares in their local markets. The latest entrant in the butter market has been
Britannia. Britannia has the advantages of a wide distribution reach and a
strong brand recall. Priced at par with the Amul brand, it is expected to give
stiff competition to the existing players. In 1999-00 the butter production is
estimated at 4 lakh MT of this only 45K MT is in the white form used for table
purposes rest all is in the yellow form.
Cheese
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The present market for cheese in India is estimated at about 9,000 tonnes
and is growing at the rate of about 15% per annum. Cheese is mainly consumed
in the urban areas. The four metro cities alone account for more than 50% of
consumption . Mumbai is the largest market (accounting for 30% of cheese
sold in the country), followed by Delhi (20%). Calcutta (7%) and Chennai
(6%). Mumbai has a larger number of domestic consumers, compared to Delhi
where the bulk institutional segment (mainly hotels) is larger.
Demand for various types of cheese in the Indian market :
Type of cheese % of total consumption
Processed 50
Cheese spread 30
Mozzarella 10
Flavoured/Spiced 5
Others 5
The major players are Amul, Britannia, and Dabon International
dominating the market. Other major brands were Vijaya, Verka and Nandini
(all brands of various regional dairy cooperatives) and Vadilal. The heavy
advertising and promotions being undertaken by these new entrants is expected
to lead to strong 20% growth in the segment. Amul has also become more
aggressive with launch of new variants such as Mozzarella cheese (used in
Pizza), cheese powder, etc.
Capacity expansion in Cheese
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Company Brands State Capacity
Dynamix Group Manufactures for
Britannia
Maharashtra 35 tons per
day
GCMMF Amul Gujarat 20 tons per
day
APDDCF Vijaya Andhra
Pradesh
10 tons per
day
Milk Powder
Milk powder are mainly of 2 types
Whole milk powder
Skimmed milk powder
Dairy sector of advanced nations export milk products with a subsidy of $
1000 per tonne with a level of subsidy more than 60 % of the price of milk
powder produced in India, this has led to large scale imports of milk powder
both in whole and skimmed form. To protect the domestic sector from these
subsidized imports the central government has recently increased the basic
import duty on all imports of milk powder more than 10000 MT to 60% from
15%. For imports less than 10000 MT the basic customs duty has been left
unchanged at 15%.
In 1999-00 India is estimated to have imported about 18,000 tonnes of milk
powder against a total estimated production of 2.40 Lakh MTs. In 2000-01
India is expected to export 10000 MT of skimmed milk powder due to rise in
international prices to $2300 per MT from last year's levels of $1400 per MT.
These expectations are based on the strong demand from Russia, East Asia and
Latin America, and also on tightening of supply in EU, which accounts for
75% of the annual global Skimmed Milk Powder exports.
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M.B.A PROGRAMME
Major Players
Milk Powder/Dairy Whiteners : Major skimmed milk brands are Sagar
(GCMMF) and Nandini (Karnataka Milk Federation), Amul Full Cream milk
powder is a whole milk powder brand.Leading brands in the dairy whitener
segment are Nestle'sEveryday, GCMMF's Amulya, Dalmia Industry's Sapan,
Kwality Dairy India's KreamKountry, Wockhardt's Farm Fresh and Britannia's
MilkMan Dairy Whitener..
Value addition in milk powder - Infant Foods
Nestle is the market leader in the segment. This is a category where
brand loyalties are very strong as mothers want the best for their babies. Heinz
is the only other significant competitor to Nestle in this segment.
Nestle'sCerelac and Nestum together have around 80% market share and
Heinz's Farex has close to 18% share. Wockhardt is a relatively new entrant
with its First Food brand. Wockhardt also proposes to launch a new baby food
Easum containing moong (moong is one of the easily digestible pulses). The
Easum brand will directly compete with Nestle'sNestum (made from rice).
Regulatory Framework
The dairy industry was de-licensed in 1991 with a view to encourage
private investment and flow of capital and new technology in the segment.
Although de-licensing attracted a large number of players, concerns on issues
like excess capacity, sale of contaminated/ substandard quality of milk etc
induced the Government to promulgate the MMPO (Milk and Milk Products
Order) in 1992. Milk and Milk Products Order (MMPO) regulates milk and
milk products production in the country. The order requires no permission for
units handling less than 10,000 litres of liquid milk per day or milk solids up to
500 tpa. MMPO prescribes State registration to plants producing between
10,000 to 75,000 litres of milk per day or manufacturing milk products
containing between 500 to 3,750 tonnes of milk solids per year. Plants
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M.B.A PROGRAMME
producing over 75,000 litres per day or more than 3,750 tonnes per year of milk
solids have to be registered with the Central Government. The stringent
regulations, government controls and licensing requirements for new capacities
have restricted large Indian and MNC players from making significant
investments in this product category.
Amul's secret of success
The system succeeded mainly because it provides an assured market at
remunerative prices for producers' milk besides acting as a channel to market
the production enhancement package. What's more, it does not disturb the agro-
system of the farmers. It also enables the consumer an access to high quality
milk and milk products.
Looking back on the path traversed by Amul, the following features make it
a pattern and model for emulation elsewhere. Amul has been able to:
Produce an appropriate blend of the policy makers farmers board of
management and the professionals: each group appreciating its roles and
limitations
Bring at the command of the rural milk producers the best of the
technology and harness its fruit for betterment
Plough back the profits, by prudent use of men, material and machines,
in the rural sector for the common good and betterment of the member
producers and
Even though, growing with time and on scale, it has remained with the
smallest producer members. In that sense, Amul is an example par
excellence, of an intervention for rural change.
Amul's success: A model for other districts to follow.
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M.B.A PROGRAMME
Amul's success led to the creation of similar structures of milk producers
in other districts of Gujarat. They drew on Amul's experience in project
planning and execution. Thus the 'Anand Pattern' was followed not just in
Kaira district but in Mehsana, Sabarkantha, Banaskantha, Baroda and Surat
districts also. Even before the Dairy Board of India was born, farmers and their
leaders carried out empirical tests of the hypotheses that explained Amul's
success. In these districts, milk producers and their leaders experienced
significant commonalties and found easy and effortless ways to adapt
Amul'sgameplan to their respective areas. This led to the Creation of the
National Dairy Development Board with the clear mandate of replicating the
'Anand pattern' in other parts of the country.
GCMMF: An Overview
Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food
products marketing organization. It is a state level apex body of milk cooperatives in Gujarat
which aims to provide remunerative returns to the farmers and also serve the interest of
consumers by providing quality products which are good value for money.
Members: 12district cooperative milk
producers' Union
No. of Producer Members: 2.12 million
No. of Village Societies: 10,411
Total Milk handling capacity: 6.1 million litres per day