Mother Dairy has set its sights on the larger nutritional domain as it seeks to bring down dependence on packaged milk, which gives the Delhi-based company close to 70 per cent of its Rs 7,000-crore annual revenue.
The plan, according to S Nagarajan, managing director since 2010, is to bring this down to about 60 per cent in the next few years and increase the proportion of revenue from value-added products. Areas the company is exploring include breakfast foods, nutrient-rich commodities such as millets and fortified or vitamin-enriched beverages.
"What we are looking at is a transition from naturally healthy products such as core milk to a nutritional range of products. Our assessment is that consumers are ready for this shift and it ties in well with our strategy of trading up," says Nagarajan, 53, a consumer goods veteran.
The move also comes as Mother Dairy looks to increase annual turnover to Rs 10,000 crore in the next two to three years. The firm, set up as a wholly-owned subsidiary of the National Dairy Development Board in 1974, has also hired senior executives from multinationals such as PepsiCo to help it diversify.
Meghand Mitra and T S R Murali have recently come on board from PepsiCo as chief financial officer and chief research and development officer, respectively. They, along with Nagarajan, are currently giving final touches to the expansion plan, expected to roll-out in the next 10-12 months.
Parallely, the company has received board approval for two huge investments - Rs 60-crore for setting up a plant for frozen vegetables and fruit pulp off Ranchi, Jharkhand, and Rs 150 crore for setting up a facility for milk and value-added dairy products near Mumbai. Work is expected to commence shortly, once all formalities on land acquisition for the plants is complete, Nagarajan said.
Mother Dairy's value-added dairy portfolio products, butter, ghee, paneer, cheese, coffee yoghurt and the edible oil brands such as Dhara and fresh and frozen fruits and vegetables brand Safal together give it about 30 per cent of its top line, which the Noida-based firm is looking to take to about 40 per cent in the next few years.
The firm has also begun extending some of its existing brands into areas such as processed foods and beverages in its drive to go beyond core milk. Safal has been taken into jams, pickles, ketchup, puree and even pulses. Mother Dairy has also launched ready-to-drink-and-serve fruit beverages under Safal in a bid to extend its portfolio.