Mother Dairy may foray into health foods

Aims for at least 20% growth in value added dairy products segment in near term

Aiming for at least 20 per cent growth in the value added dairy products segment in the near term, Delhi-based Mother Dairy Fruit & Vegetable, subsidiary of the National Dairy Development Board, might enter the health foods segment and diversify its low-calorie product line.

Value-added dairy products, fastest growing category for the company, comprised 18 per cent of its latest annual turnover of Rs 6,800 crore. The category covers ice-cream, cheese, yoghurt, buttermilk and cottage cheese, among others.

"Low-calorie items are gaining traction and is definitely a focus area for us. Besides, entering into health food is an objective," said S Nagarajan, managing director.

However, despite being asked, he would not go into specifics on products or schedules.

The company has invested around Rs 15 crore in research and development to come up with new health foods and low-calorie product lines. Nagarajan adds that their research has found females in the 11-59 years age group are deficient in calcium, iron and Vitamin-D, presenting a new consumer division possibility for it.

Targeting Rs 10,000 crore annual turnover by the end of the next two financial years, the company is also betting on its Dailycious brand, which until recently focused solely on powder milk; it recently came up with liquid milk. In Bengal, where the company cannot sell liquid milk under the Mother Dairy name, owing to the state government having the brand rights, it has extended the Dailycious brand to do so in the state.

The milk portfolio accounts for a little over 70 per cent of its annual earnings but its contribution to overall sales is poised to fall to around 60 per cent by 2018-19 as sales of its value added dairy products pick up.

The company is keen to target the market in Bengal and the neighbouring area. "The eastern region (market) is poised to grow by 10-12 per cent in the coming 10-15 years. We don't want to miss our growth opportunity here," said Nagarajan.

Currently, the eastern region accounts for around 15 per cent of its annual revenue; the northern region contributes 80 per cent. Nagarajan is aiming to grow the brand by testing in West Bengal, and thereafter, based on market response, do so across India, except the south. It had first experimented with its sweet curd in Bengal and then went for a national rollout.

"Having another brand in the same category is a tactical thing to do," said Nagarajan, while admitting there could be risks of the new brand eventually eating into its other milk variants, especially in the north.

The company continues to face procurement challenges in the vegetable and fruit segment and doesn't expect significant growth in the near term from this division.