Sectoral Capsule - Cheese Market in India (2009 - 2018) - Say Cheese to Prosperity
The Indian dairy industry has registered positive growth in the last decade and promises immense potential in the near future. As the largest milk producing country in the world, India is expected to become a key player in the global dairy industry by 2020. To transform it into a globally competitive leader, the quality of milk and other dairy products needs to be improved by developing the industry at each level of the supply chain, starting from the farm gate to processing plants.
Further, as disposable income and purchasing power continue to rise, the demand for milk is anticipated to expand at a higher rate than in the previous decade. Presently, the consumption demand for milk is growing faster than overall milk production. This could create a demand–supply mismatch in the near future. Besides, a rise in income levels of rural households coupled with farm debt waivers, will accelerate the demand for milk and dairy products in both the rural and the urban areas.
Meanwhile, the growth of milk production is likely to sustain at the current rate of 4 percent, while the consumption demand is anticipated to increase at 7 percent. Since the consumption demand is significantly higher than the anticipated growth of milk production, the sector offers huge growth potential for dairy companies. Moreover, the value-added dairy products have seen a spiraling demand in the last decade. The most promising segment has been the cheese market. With market mostly dominated by few variants, less consumption, low penetration and unorganized players, cheese market has given lot of hope to new and existing dairy firms. The industry has experienced a 50 percent rise in cheese sales in the last five years. Besides, many local cheese makers have found investors in the form of private equity firms to increase their production due to rising demand.
The cheese market in India is estimated at USD 237 million in 2013 and is predicted to grow with a healthy rate of 20 percent annually to reach USD 590 million by 2018. The competition is heating up among existing dairy companies in India. Parag, Amul, Britannia and Nestle are investing heavily to augment their production capacity, product portfolio and operational efficiency to match the domestic and overseas competition.
Innovative marketing, technological growth and research and development in cheese production have opened up new avenues for growth in the Indian cheese industry. More and more tech-support companies are entering into the Indian dairy market as the demand for technological efficiency and innovation in the supply chain increases. The expansion of the industry coupled with stagnation in developed countries has compelled foreign companies to enter the Indian market either through acquisition or joint venture.
However, lack of infrastructure to store milk, low productivity, high cost of production and logistic concerns have stagnated the growth of the dairy industry. With the development of various government policies in dairy farming and the induction of modern techniques and technology in production methods the Indian dairy sector is poised for exponential growth. An upgradation of the supply chain mechanism would be the winning ace for the industry. Going forward, both Indian and international manufacturers are expected to invest in expanding their capacities. With technology adoption coupled with researches in dairy processing and cheese manufacturing, the industry is looking up towards prosperity.