Nestle In Co-Branding Pact For Milk Products

Coffee-to-foods giant Nestle India has tied up with Bangalore-based supermarkets group Nilgiris to co-brand a whole range of desi dairy products. The products to be co branded include dahi, paneer, ghee and possibly milk.

C Gopalakrishnan, director of Nilgiris said: "We have signed a deal with Nestle under which we would manufacture some of the desi products on their behalf and then go for their co branding in south India".

Gopalakrishnan said they are working on various brand names, including Nestle-Nilgiris, Nilgiris-Nestle or only "N&N". Nilgiris already manufactures yoghurt and dahi in pouches for the multinational.

Gopalakrishnan said the tie up will provide Nilgiris an association with an international company while, for Nestle, it is a way to enter into the desi dairy products market.

Nestle is already expanding its portfolio into value added dairy products and has been selling tetrapack milk, butter and yogurt under its brand name.

The southern based retail chain which processes more than 38 per cent of the products it sells in its stores in-house is now planning to grow beyond the Vindhyas. Plans are on the anvil to enter Mumbai, Delhi and Kolkata through franchisees.

Nilgiris, which undertook an internal valuation with the help of a merchant banker in Mumbai, is valued at Rs 600 crore. According to the India Retail Report (a study conducted by Images, a retail and fashion magazine), which was released recently, Nilgiris has 26 stores spread across 12 cities in the south with a total area of 89,000 square feet and a turnover of Rs 230 crore.

The study says Nilgiris is investing Rs 25 crore for 30 new outlets in the next two years and will add in another 50,000 square feet in the south, Maharashtra and Gujarat.

Nilgiris, which started as a dairy company, stacks a range of products including groceries, dairy products, confectioneries, clothing, pharma, fashion and utilities.

Nilgiris is among the many supermarkets that have come up in the country selling food and grocery items. In the south, Nilgiris competes with the RPG-controlled FoodWorld (which has over 75 stores) and Subhiksha (with over 112 stores mostly concentrated in Chennai). In Kerala the largest retail chain is Margin Free with over 239 stores.