Milk processing and dairy products industry in India holds immense growth potential on the back of increasing disposable incomes and evolving consumer preferences. The industry has witnessed a colossal shift with the focus drifting from basic fluid milk and butter & ghee to more advanced value added products like cheese, ice cream and, the more modern, yogurt. And through this report we aim to help an entrepreneur identify dairy sector as a potential investment avenue. First, let’s understand the basics of dairy sector in India.
Indian Dairy Industry
Indian dairy industry holds an inimitable space in the country for its high employment potential and for ensuring the availability of nutritious yet affordable food for India’s vast population. India is the largest producer as well as largest consumer of milk in the world. It contributes ~17% to the world milk production and consumes almost whole of its milk production by itself.
The tag of largest milk producer was not always in India’s kitty. From being milk impoverished nation to the top producer has been an arduous and almost miraculous climb. Such unprecedented rise is docketed to Operation Flood and the historic dairy cooperative movement.
In India, only 20% of the milk production takes place in the organized sector while the rest is contributed by the unorganized segment of the industry.
The chart below discusses the structure of Indian dairy industry.
Figure 1 Indian Dairy Industry- Structure
Also, dairy products in India are classified as raw/fluid milk and milk processing products. Fluid milk captures a large part of the overall sector, while the demand for milk processing products has been on the rise since last few years.
Figure 2 Indian Dairy Industry- Classification