High milk prices likely to continue till October: Mother Dairy MD

For the next six months, we will have a portfolio of various categories, says Manish Bandlish

High milk prices are likely to persist till October, and so are demand-supply imbalance and stress in the availability of raw milk and fodder. Any disturbance in the dairy sector takes two-three years to be normal, says Manish Bandlish, managing director, Mother Dairy, in an interview to Pratigya Yadav. Edited excerpts.

How was the company’s growth in 2022-23?
 

We had a solid growth path in the past one year. After Covid, generally, consumption in the dairy sector has been strong. We have seen growth in milk categories including fermented products like curd, chhach, and ice cream, which were dormant in the previous two years. Summer products had the maximum consumption. If we compare with the Covid period, growth has been more than 100 per cent.

How have the specific categories performed in the past one year?
 

We are witnessing healthy growth in volumes in categories such as ice cream by around 65 per cent. In polypack curd, growth is close to 35 per cent and in cheese (paneer) around 20 per cent from April 2022 to January 2023 over the same period in the previous financial year. Other categories like dairy beverages, major products with a long shelf-life, and ghee are witnessing growth in double digits. Milk doesn’t normally grow at 20-30 per cent.

What is the rate at which the dairy industry is growing and what are the growth expectations for the coming years?
 

Most of the firms will be growing close to 15-20 per cent. For milk products like cheese, flavoured milk, and lassi, the market is expected to grow more than 20 per cent a year. We expect to close this financial year with a growth rate in turnover of around 20 per cent.

Will you foray into new categories in the coming summer?
 

For the next six months, we will have a portfolio of various categories. In addition to a range of new offers in the ice cream category, we would be launching RTE custard, which is the one of the first in a month’s time. There are plans to add variants to strengthen existing categories such as cheese and milk beverages. Some ice creams will also be launched.

Why is there a supply-demand imbalance in the industry?
 

For the past couple of years, the investment that should have taken place in rearing new cattle did not happen. Activities like artificial insemination should have continued regularly. Covid restrained all such activities for at least a year because everybody, including farmers, was suffering. The second reason was the weather conditions and shortage of fodder. Fodder prices have shot up almost three times, leading to a sharp increase in the cost of production for farmers. Also, as demand rose, most companies procured milk in large quantities. Hence the demand-supply gap.

Are you planning to hike milk prices further?
 

Our decisions are based on balancing the interests of farmers and consumers. Unless the situation demands, we do not want to hike prices. But if the prices of raw milk keep increasing, we might. Milk prices going up benefits farmers and the only way to recoup that cost is charging consumers. High milk prices and stress in the availability of raw milk and fodder are likely to stay till October. Any disturbance that affects the dairy sector takes two-three years to be normal.

Are there any expansion plans beyond the Delhi-NCR region for your dairy business?
 

We are present in states including Maharashtra, Bihar, and Uttar Pradesh. Dairy as a business is fragile when it comes to transportation. The farther one goes from the production place, the greater the cost one bears, so we are planning to build operational efficiencies into the value chain. We are also planning to have an innovative product range, driven by consumer insight. So, our strategy is to strengthen our presence in our existing markets. We have long-term plans for expansion, which are shaping up.