Fonterra to focus on margins over volumes

The retail giant Future Group, which recently entered into a joint venture with the New Zealand-based dairy firm Fonterra, is planning to expand its product portfolio with a slew of new products for the Indian market.

The company is currently operating in Bengaluru, Pune, and Mumbai with just three products - UHT toned milk, chocolate, strawberry milkshake, and curd. However, it has plans to launch innovative products in the Indian market soon.

The new products include fizzy milk and transparent milk. “We are planning to enter southern and western markets soon,” the company chairman Sunil Sethi said.

The company sells value-added milk products under the name ‘Dreamery’ in India.

In a market which has been price-sensitive and focuses on the volume game, the company aims to garner a sizeable foothold. Till then, the company’s policy is simple: focus on margins.

Named as Fonterra Future Dairy, the company is 50:50 joint venture and it will be the exclusive channel for consumer and foodservice dairy activities in India for both the companies.

For now, the company is directed by a board of directors, consisting of three directors from each company.

The company, however, is not compromising on the principles of quality by pricing lower. “We will offer quality at a price which gives a feeling of value for money. Also, we are very strict about our milk quality and practices that we follow,” he added.

The battle would not be easy for the company. The company is facing competition from established players like Nandini in one of the primary market – Bengaluru. Nandini, a brand of Karnataka Milk Federation, has over the years focussed over packaged milk production on the mass scale. The company, however, is hopeful that after its marketing campaign would be successful in penetrating the markets, without predatory pricing.

According to market research company IMARC, the dairy market in India reached a value of Rs 9.17 lakh crore in 2018. It expects the market to grow by a CAGR of 16% till 2024 to Rs 21.97 lakh crore.

“The focus is being given to value-added products such as cheese, yoghurt, probiotic drinks, etc. They are also introducing products keeping in mind the specific requirements of the Indian consumers. These players are also improving their milk procurement network which is further facilitating the development of the dairy industry in India,” it said in its recent report.

As of now, the Indian diary market comprises of many products such as milk, flavoured milk, UHT milk, curd, probiotic products, dairy whiteners, skimmed milk powder, among others.