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Industry Analysis on Dairy Industry

Certificate
This is to certify that the report entitled, The Dairy Industry, as a part of Project Study is done by Pawan Kumar Gangwar during the academic year 2010-11 of his study in Faculty of Business Management, at Marwadi Education Foundation under the supervision and guidance of Prof. Chhavi Manra, professor, PGDM

Countersigned

Signature (Guide)

Signature (Coordinator)

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Acknowledgment
We are greatly thankful to our Dean, Dr Chinnam Reddy, Faculty of Business Management Marwadi Education Foundation, Rajkot who is always used to encourage us by his support & advices. I would like to take this opportunity of expressing our profound gratitude to our guide Chhavi Manra for their Valuable guidance. I specially thankful to Prof. Rutwa Mehta, Coordinator of PGDM who encouraged and guided us for our project. She is always looking to provide great training to students in any case and we thank her for her precious suggestions for the project, through their experience in project development.

Lastly, over and above all I am thankful to Marwadi Education Foundation, Rajkot, which provided me the background for my project and to all those who showed confidence in my project.

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Table of Contents Certificate ....................................................................................................................... 2 Acknowledgment ............................................................................................................ 3 History ............................................................................................................................ 6 Introduction .................................................................................................................... 7 Indias Milk Product Mix ............................................................................................ 8 Total Contribution To Economy/Sales ....................................................................... 8 Expected Market To Be In Indian Dairy Market To Double By 2011........................... 9 Reason behind India success ........................................................................................ 11 Industry Structure ......................................................................................................... 16 Product Portfolio........................................................................................................... 18 Universal Products ........................................................................................................ 19 Milk Processing ............................................................................................................ 23 India Stand In Milk Production .................................................................................... 24 Advantages Of Milk Industry In India ......................................................................... 27 Major Players Of Dairy Industry .................................................................................. 28 Gujarat Cooperative Milk Marketing Federation...................................................... 28 Financial Performance Of Industry ....................................................................... 29 Product Portfolio .................................................................................................... 30 BCG MATRIX OF AMUL ................................................................................... 33 Nestle ......................................................................................................................... 34 Product Portfolio .................................................................................................... 35 SWOT Analysis Of Nestle Confectionary ............................................................. 37 BCG Matrix Of Nestle ........................................................................................... 39 Financial Performance of Nestle ........................................................................... 41 Britannia .................................................................................................................... 44 SWOT Analysis of Indian Dairy Industry .................................................................... 47 Strengths: ................................................................................................................... 47 Weaknesses ............................................................................................................... 47 Opportunities ............................................................................................................. 48 Threats ....................................................................................................................... 48
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PEST ANALISYS ........................................................................................................ 49 Porters Five Force Analysis on Dairy Industry ........................................................... 51 Threat of New Entrants: ............................................................................................ 51 Threat of Substitutes: ................................................................................................ 52 Rivalry Among Competitors ..................................................................................... 52 Bargaining Power Of Customer ................................................................................ 52 Bargaining Power Of Suppliers ................................................................................ 53 Bibliography ................................................................................................................. 54 Reference ...................................................................................................................... 55 Conclusion .................................................................................................................... 56

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History
India is the highest milk producer in the entire globe. India is well known as the Oyster of the global dairy industry, with opportunities galore for the entrepreneurs globally. It might be dream for any nation in the world to capitalize on the largest and fastest growing milk and milk products' market. The dairy industry in India has been witnessing rapid growth with liberalization. As the economy provides good opportunities for MNCs and foreign investors to release the full potential of this industry. The main objective of the Indian Dairy Industry is to manage the national resources in a manner to enhance milk production and upgrade milk processing using innovative technologies. The crossbred technology in the Indian Dairy Industry has further augmented with the viability of the dairy units by increasing the milk production per animal. Then subsequently milk production has also increased at an exponential rate while the benefits of an increase in milk production also reached the consumers from a relatively lower increase in the price of milk. The favorable price environment for milk producers for the Dairy Industry in India however appeared to have weakened during the 90's, a decline in the real price of milk being noticed after the year 1992. And then slowly regained it is glory after 1992 to till now. In India dairying from very much earlier is regarded as an instrument for social and economic development. The countrys milk supply comes from millions of small producers, who are dispersed throughout the rural areas. All these farmers maintain an average herd of one or two milch animals, comprising cows and/or buffaloes. Mostly ample labour and a small land base encourage farmers to practice dairying as an occupation subsidiary to agriculture. As income from crop production is seasonal instead dairying provides a stable which is a year-round income and also an important economic incentive for the small farmer.

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Introduction
India had tremendous milk production in 40 years and has become the worlds largest milkproducing nation with a gross output of 84.6 million tons in 2001. The Indian Dairy Industry has achieved this strength of a producer-owned and professionally-managed cooperative system, despite the facts that a majority of dairy farmers are illiterate and run small, marginal operations and for many farmers, selling milk is their sole source of income. More than 10 million dairy farmers belong to 96,000 local dairy cooperatives, who sell their products to one of 170 milk producers cooperative unions who in turn are supported by 15 state cooperative milk marketing federations. In India dairy business has been practiced as rural cottage industry over the years. Semicommercial dairy started with the establishment of military dairy farms and co-operative milk unions throughout the country towards the end of the 19th century. Since Independence this Industry has made rapid progress. A large number of modern milk and milk product factories have since been established. The organized dairies in India have been successfully engaged in the routine commercial production of pasteurized bottled milk for Indian dairy products. The growth of Indian Dairy Industry during the last three decades has been impressive, at more than 5% per annum; and in the 90's the country has emerged as the largest producer of milk. This is not a small achievement when we consider the fact that dairying in India is largely stringent that farmers in general keep dairy animals in proportion to their free crop and also are available for family labor with little or no purchased inputs and a minimum of marketed outputs. The existence of restrictive trade policy milk in the Diary Industry and the emergence of Amul type cooperatives have changed the dairy farming practices in the country. A farmer has gained the favorable price for their milk and for their production which was essentially a self-reliant one is which is now being transformed into a commercial proposition. In India Milk production is dominated by small and marginal land-holding farmers and also by landless labourers who in aggregate own 70% of the national milch animal herd. And as the crop production on 78% of the agricultural land still depends on rain, which is prone to both drought and floods, rendering agricultural income is very much uncertain for most of the farmers. Dairying, as a subsidiary source of income and occupation, is real relief to most of the farmers in the society. Usually one or two milch animals enable the farmers to generate sufficient income to break the vicious subsistence agricultural-debt cycle. The Operation Flood which is the successful Indian dairy development programmed has analyzed that how food aid can be utilized as an investment in building the type of institutional infrastructure that can bring about national dairy development. Programmers like this, with similar policy orientations, may prove to be appropriate to dairy development in in India.

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India in the early 1950's was commercially importing around 55000 tonnes of milk powder annually to meet the urban milk demand. Most of the significant developments in dairying have taken place in India in this century only.

Indias Milk Product Mix


Fluid Milk Ghee Butter Curd 46.0% 27.5% 6.5% 7.0%

Khoa (Partially Dehydrated Condensed Milk) 6.5% Milk Powders, including IMF Paneer & Chhana (Cottage Cheese) Others, including Cream, Ice Cream 3.5% 2.0% 1.0%

Total Contribution To Economy/Sales


The Indian Dairy Industry engages in the production and processing of milk & cream. This industry is involved in the manufacture of various dairy products like cheese, curd, yoghurt etc. The Indian Dairy Industry specializes in the procurement, production, processing, storage and distribution of dairy products. India as nation stands first in its share of dairy production in the international scenario. The industry contributes about Rs 1,15,970 to the national economy.

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Expected Market To Be In Indian Dairy Market To Double By 2011


Which is India's No. 1 crop? Is it rice or wheat? Well, neither. The right answer happens to be milk. The country's milk production is estimated to have touched 100 Million Tones (mt) last year, which is higher than the estimated, 92, MT for rice and 75 MT for wheat. In value terms, too, a kg of milk is worth more than what you and I pay for a kg of rice and wheat. But despite all this and the fact that India is today the world's largest milk producer, the dairy industry is for some strange reason not considered `glamorous'. For policy makers, dairying is viewed as a `subsidiary' activity. This is when milk is one product that generates cash income to farmers almost on a daily basis, unlike sugarcane or wheat. Besides being a source of liquidity and insurance against crop failure, milk is the only crop where the farmer realizes 60-70 per cent of consumer price - against 20 per cent or so in fruits and vegetables. Again, it is striking that there are no commodity futures in milk powder or ghee, whereas the daily turnover volumes in NCDEX and MCX of Guar seed, Methane oil, Jeera or Pepper run to hundreds (even thousands) of cores ! One reason for this `image problem' suffered by milk has to do with the absence of proper databases with authentic information on the sector. This is a gap that Dairy India 2007 (Sixth Edition) seeks to fill. A treasure trove of information, this 864-page publication offers the most comprehensive and up-to-date picture about the world's numerous Uno dairying nations. An invaluable Databank-cum-Management Guide-cumDirectory, it contains over 120 in-depth articles, 260 statistical tables and charts and reference details of 7,000 organizations including dairy plants and farms, equipment and consumable manufacturers, cattle feed and veterinary pharmaceutical manufacturers, chemicals and food additives, project consultants, breeding and fodder seed farms, analytical and disease-diagnostic laboratories, cooperative institutions and government agencies. The articles cover a range of topics including trends in consumption and market size of milk and milk products, WTO challenges and export potential, management of dairy plants and farms, breeding, feeding and nutrition, health care, clean milk production, food safety and quality standards as well as techno-economic feasibility of small and large scale dairy plants and farms, cattle feed units, and manufacture of cheese, ice-cream, etc. In addition, there is a special section devoted to technology innovations and organized production of indigenous milk products such as Paneer, Gulab Jamun, Rasogolla and Shrikhand - a potentially lucrative segment ignored so far by the industry in its obsession with butter, cheese and other `foreign' products.

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Contributors include the President, Dr A.P.J. Abdul Kalam and the Father of India's Dairy Revolution, Dr V. Kurien, besides a host of acknowledged experts in livestock management, marketing, processing technologies and policy makers. In response to unprecedented developments in Asian countries, a special section, `Dairy Asia', has been introduced. Dairy India 2007 has estimated the size of India's dairy sector in 2005 at Rs 227,340 crore (valued at consumer prices). The largest contributor to this is liquid milk (at Rs 82,835 crore), followed by ghee (Rs 22,980 crore), khoa/chhana/paneer (Rs 24,100 crore), milk powder (Rs 4,680 crore), table butter (Rs 770 crore), cheese/edible casein (Rs 975 crore) and other products such ethnic sweets, ice-cream, etc (Rs 9,100 crore). Out of the total milk production of 94.5 mt, 77 per cent or 73.1 mt is sold as liquid milk, with the balance 23 per cent or 21.4 mt converted into products. Further, the organized industry handles only 18 per cent or 17 mt of milk, with 36 per cent (34.5 mt) being handled by private dudhias and unorganized players and 46 per cent (43 mt) being retained in rural areas. Within the 18 per cent organized sector share, private and cooperative/government dairies handle an equal 8.5 mt each. By 2011, Dairy India projects the value of the industry to more than double to Rs 520,780 crore, which includes Rs 159,600 crore from liquid milk, Rs 42,680 crore from ghee, Rs 50,500 crore from khoa/chhana/paneer, Rs 9,100 crore from milk cent (36 mt), while the small players will see their share dip to 22 per cent (26 mt). At the same time, higher rural incomes will marginally boost the share of milk retained in rural areas to 48 per cent or 58 mt. The other significant feature is that within the 30 per cent overall share of organized dairies, the major 20 per cent (24 mt) will be accounted for by the private sector. The cooperatives and government dairies will handle 10 per cent or 12 mt of milk, which will be lower than that of the organized private sector.powder, Rs 2,250 crore from table butter, Rs 6,150 crore from cheese/edible casein and Rs 25,050 crore from other products. Interestingly, out of the anticipated milk output of 120 mt, the share of liquid milk will rise to 81 per cent or 97.5 mt and only the rest 19 per cent (22.5 mt) would get converted into products. But the organized industry's share of total milk handling will go up to 30 per

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Reason behind India success


Operation flood (also known as the White revolution of India) was a rural development program started by Indias National Dairy Development Board (NDDB) in 1970. One of the largest of its kind, the prime objective was to create a nationwide milk grid. It resulted in making India the largest producer of mil & milk products, and hence is also called the white revolution of India. It also helped reduce malpractices by milk traders and merchants. This revolution followed the Indian green revolution and helped in alleviating poverty and famine levels from dangerous proportions in India during the era.

Father of White Revolution: Dr. Varghese Kurien


One mans resolute faith and efforts have gained a prominent position for India on the Dairy map of the world - Dr Varghese Kurien created the Operation Flood in the country that has reached about 250 million and is one of the largest agricultural development programs in the world. Dr. Varghese Kurien, better known as the Father of White Revolution in India is also known as the Milk man of India. He is the architect of a successful largest dairy development program in the world called as Operation Flood. Kurien set up the Anand model of cooperative development, engineered the white revolution in India, and made India the largest milk producer in the world

Milk Production, Storage and Transport


India has a unique pattern of production and collection of milk, which not comparable with practices prevalent in other major milk producing nations. The co-operative model (Anand Model) is predominant. Villagers usually milk their cattle twice daily (once early morning and then in the evening) and collect the milk in cans or vessels. The milk is immediately sent to the nearby collection centres, which collect milk for the nearby villages on behalf of the co-operative. Sometimes the milk is also sent to agents, who work on behalf of the private dairies. The collection centre carries out quality / purity (fat and SNF content) and quantity check and sends the cumulative milk to nearby chilling centers. Many times the collection centers use ice cubes in the milk to maintain the temperature of the milk in transit to chilling centre. Chilling centres use bulk coolers / chillers to bring down the temperature to 4-50C and send the milk to processing plants in insulated tankers / Lorries, which maintain the temperature of milk at around 40C.

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The processing plants usually enter into agreement with transport companies on maintaining certain minimum speed limit of their tanker fleet; so that the chilled milk reaches the processing plants as soon as possible without major degradation of bacteriological quality.

Issues
Unhygienic collection practice: The bacteriological quality of raw milk in India at the time of collection is equivalent to that of leading milk exporting countries. However enough care is not taken to maintain high standards of hygiene during milking and storage. Lack of awareness and basic amenities (like running water in cattle shed for cleaning the cattle shed and milking vessels, sewage disposal etc) and use of unhygienic equipment / vessels significantly impacts the quality of the milk at the place of milking. The current practice of pricing milk based on fat and SNF does not motivate the farmers to strive for hygienic milk collection.

Lack of infrastructure and time lag for chilling: The small holding structure of Indian dairy industry does not allow chilling at the point of collection. The country does not boast of a wide network of chilling plants and bulk coolers either. Many chilling plants suffer due to shortage of electricity and do not run optimally. The time lag for the milk to reach from the household to the chilling centre and subsequently to the processing plant is substantial. During a major portion of this time lag, the milk is kept at ambient temperature (which may touch 40-450C in many parts of the country in peak summer) which results in deterioration of milk quality in terms of sensory properties (odour,
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taste, colour), composition (fat, SNF, protein etc), and hygiene (bacteriological - pathogenic, somatic cells). An increase in temperature prior to pasteurization can lead to exponential increase in bacterial count (EU standards allow a maximum of 100,000 / ml) and significantly impact the quality and sensory properties of processed milk products.

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Indian Dairy Market Report & Forecasts 2011-2016

Being the worlds largest producer and consumer of dairy products, India represents one of most lucrative dairy markets. IMARC Group, one of the worlds leading research and advisory firms, finds that the sales of dairy products in India will nearly double its size from INR 2.6 Trillion (US$ 60 Billion) to around INR 5.1 Trillion (US$ 115 Billion) by 2016. IMARCs new report entitled Indian Dairy Market Report & Forecasts 2011-2016 provides an analytical and statistical insight into the Indian Dairy market. The study which has been undertaken using both desk research and two waves of qualitative primary research has analyzed three aspects of the Indian Dairy Market. The first section quantifies the Indian dairy market into twelve major classes and investigates the current and future opportunities in each of these classes. The second section involves an in-depth understanding of dairy consumption patterns among Indian consumers and the potential of value added dairy products. The third section investigates the usage of natural colouration in dairy products and evaluates their current and future potential.

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Comprehensive situation analysis of the Indian dairy market and its dynamics

Classes Covered: Milk, Curd, Butter, Ghee, Paneer, Cheese, Tea, Coffee, Dairy Whiteners, Infant Nutrition, Malt Beverages and Ice Cream

Focus of the analysis in each Class:


Drivers and challenges in each market Historical sales trends Individual analysis of the unorganized and organized markets Structure of the market Key players and products available in these markets Six year sales forecasts (2011-2016)

Understanding The Dairy Consumption Patterns Of Indian Consumers And Evaluating The Potential Of Value Added Products:
In order to gain a consumer insight on the awareness and acceptance levels of value added dairy products, IMARC Conducted in-depth interviews with Industry experts and consumers in major metropolitan and tier-1 cities in India

Focus of the analysis:


Buying behavior Price sensitivity Nutritional requirements Consumer awareness of value added products Brand loyalty and switching trends Potential of value added dairy products in India

Understanding The Current Landscape Of Natural Colouration In Dairy Products


Classes Covered: Butter, Cheese, Yoghurt, Margarine, Flavored Milk and Ice Cream

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Industry Structure
Milk production in India is highly fragmented and unstructured. Traditionally, bulk of the milk production (around 98%) comes from small and landless farmers, who take up milk production as a supplementary source of income. However, due to high proliferation of co-operative societies, most of these farmers are members of cooperatives and leverage the organized dairy collection network run by co-operatives / government dairies. Private dairies also procure milk from small farmers directly or through agents. The co-operatives usually follow a 3 tier model (popularly known as Anand Model, after the successful Anand based cooperative). The village co-operative societies collect and cool milk from villagers. The district unions consolidate society shipment and operate manufacturing plants to handle fluid surpluses. Marketing and co-ordination is handled by the state federations.

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Product Portfolio
The uniqueness of Indian dairy consumption pattern is reflected in the product portfolio of the Indian dairy industry. The Indian dairies as well as unorganized sector produce a wide array of dairy products.

Traditional Indian milk products are the largest selling and the most profitable segment. This segment accounts for almost 50% of total milk produced and 95% of total milk products consumed in India. The major strength of traditional products is its mass appeal. The market for these products far exceeds the market for universal products like milk powder, table butter, and cheese. The margins for the traditional products are also much higher than those for universal products.

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The product portfolio of traditional Indian milk products is very wide, and is continually expanding. The unique sensory properties and ways of making have been posing a significant challenge for organized sector to produce traditional Indian milk products in large quantities. However, significant headway has been made in industrial production of some traditional Indian products such as shrikhand, gulab jamun, peda and burfi. This is seen as the beginning of a revolution in the production and marketing of all time popular indigenous products that were hitherto the exclusive preserve of traditional sweet makers. However, the organized sector has been able to make inroads into only a few traditional product markets and a large number of products are yet to be produced industrially. The unorganized sector still is the dominant force for traditional Indian milk products.

Universal Products
Though the percentage of universal products is small in overall dairy market, India produces a fairly wide array of products. These include butter, SMPs (Skim Milk Powder), WMPs (Whole Milk Powder), ice creams, baby foods, butter, chocolates, cheese, cheese spreads, cheese slices, dairy whiteners, and margarine etc. Details of few key universal products are provided below.

Cheese
The organised cheese market includes cheese and its variants like processed cheese, mozzarella, cheese spreads, flavoured and spiced cheese. The consumption of cheese / edible casein in India is estimated to be A$ 662 million in 2008 and is expected to reach A$ 1,663 million in 2011. Processed cheese corners 60% of the overall market. The next most popular variant is cheese spread claiming a share of around 30% of the total processed cheese market. The market is primarily an urban phenomenon and is known to be growing at around 10%. The market for cheese cubes, slices and tins is growing as well. The flavoured cheese segment on the other hand, has been constantly declining.

Ice Cream
Indias Ice Cream market is valued roughly at A$ 811 million in 2008 and is one of the fast growing dairy segments in India. The organised sector accounts for around 40% of the market and is restricted mainly to urban centres. Eight cities account for 60% of Indias total ice cream consumption. Though the unorganised sector accounts for 60% of the market, it is shrinking considerably in urban areas. However, in rural areas, kulfis / ice cream made by small / cottage industry is popular. In small towns and villages, there are thousands of small players who produce ice creams / kulfis and cater to the local demand. The per capita consumption of ice cream in India is little over 500 ml compared to an estimated 30 litres
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in US. The western and northern parts of India have much higher consumption than the rest. The consumption also witnesses a strong seasonal variation, wherein April to June is considered peak season and accounts for 50% of the sale. The festive season in OctoberNovember also contributes 15-20% of the sale. The ice cream prices are reported to be three times higher than the prices prevailing in America, one of the reasons being the legal requirement of at least 10% milk fat in ice cream.

Yoghurt
Yoghurt was a very late entrant in Indian market. The primary reason behind that is an average Indian consumer is in a regular habit of consuming dahi - a cultured dairy product, which has very similar sensory properties as yoghurt. In India, several efforts were made by the co-operatives and private dairies to produce and market yoghurt in small and large quantities. Most of these players had to discontinue the yoghurt production because of less awareness among consumers, its higher price compared to dahi, inadequate distribution network and other production and marketing related factors. Another key factor is that dahi is made at home by almost every household.

Table Butter
The estimated market size of table butter in India is A$ 356 million, and it is expected to reach A$ 608 million by 2011, at an average growth rate of 20%. The consumption of butter is expected to ride on the changing lifestyle of the middle class, especially in larger cities. In smaller cities and villages, makkhan is usually consumed instead of butter.

Milk Powder
Milk powders corner the largest share of universal products in Indian dairy market. The estimated value of milk powder market in India is A$ 1,765 million and expected to rise to A$ 2,164 million by 2011. Milk powder is consumed in large quantities and also exported to many other countries. Milk powders are the preferred substitute to bridge the lean-flush (i.e. off peak-peak productions) as well as regional milk production gap.

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The high income elasticity coupled with growing affluence of Indias population suggests that there is strong likelihood that the milk and milk products consumption will grow at a healthy rate (industry experts indicate it to grow in the range of 8-10% annually). To meet this demand, the current growth rate of milk production (4-5% annually) needs to be stretched. Any gap in growth rates in consumption.

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Milk Processing
About 45-50% of milk produced in India is processed. The milk processing is done by

Unorganised Sector:
This constitutes the local sweet makers who make varieties of traditional milk products. These sweet makers usually have small shops where they use traditional methods (where degree of mechanisation is extremely low) to make milk products which have very small shelf life. The unorganised sector is highly fragmented and processes about 32 million tonnes of milk per annum.

Organised sector:
Co-Operatives / Govt Dairies They process around 10 million tonnes of milk. Liquid milk (pasteurised / processed) form bulk of the product output (around 80%). The rest of the product portfolio is usually dominated by traditional Indian products, though many cooperatives also produce universal dairy products like butter and cheese. Private dairies Unlike co-operative dairies, the product portfolio of private dairies generally consists of more milk products than liquid milk. Lack of social obligation for producing liquid milk (unlike co-operatives who focus on providing liquid milk to the population) and greater margins on Indian dairy processed products are the reasons for this. These private dairies process about 14 million tonnes of milk. Recently, most of the processing capacity has been added in the private sector. The processing capacity of organised dairy in India is growing at a rate of 4%. In cooperative sector, few entities control bulk of the capabilities. The more prolific cooperatives operate in the states of Gujarat, Tamil Nadu, Andhra Pradesh, Punjab and Uttar Pradesh. On an average, the processing capacity of co-operative dairies is higher than that of the private dairies.

The capacity utilisation in both private and co-operatives is low (around 65-70%) and is increasing gradually. The low capability utilisation is owing to huge difference between milk production in lean (summer) and flush (winter) season. Many companies also outsource the processing work to dairies with excess capacity. While smaller dairies are preferred for milk processing, relatively larger dairies with better technology and track record are preferred for processing dairy products.

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India Stand In Milk Production


Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Country India United States Pakistan China Germany Russia Brazil France New Zealand United Kingdom Ukraine Poland Netherlands Italy Turkey Mexico Australia Egypt Argentina Production (109kg/y) 114.4 79.3 35.2 (needs validation) 32.5 28.5 28.5 26.2 24.2 17.3 13.9 12.2 12 11.5 11 10.6 10.2 9.6 8.7 8.5

13% of the total production of the milk is contributed by India. The large vegetarian sector of the India feed upon the dairy products of India. This part of the industry has helped the India economy in better possible ways. Some of the glaring problems of the economy are dealt with much ease. The unemployment and the rates of poverty have diminished as this sector has provided ample scope to these fields. The industry has seen rapid growth in recent years. The best possible technologies are undertaken and the resources are used in fullest extent so that the sector reaches the booming phase. India houses the largest livestock in the world. 50% percent of the buffalo and 20 % the cattle are present in India in respect to world. Moreover the milk and the milk products of India are highly acclaimed in different parts of the world. It ranks first in producing dairy products in India. Some of the past reports of the past year found that when the production of milk was 72 million then the demand reached 80million. So the country under the regulatory bodies have gone far to increase the production of milk and other milk products to higher extent. The preset production of milk as marked in the year 2009- 2010 is 112mt which follows a growth rate of 4%. But the recent research confirmed that by 2012-21 the growth rate must
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increase to 5.5% where the quantity produces should be 180mt. this is only due to higher the consumption rate. More over the country is stressing on the milk product industries to increase there production rate, all the public and the private sector s of milk production are taken into grant. The per capita availability of milk is 253grams/day. The government is trying hard to increase these rates too.

The Rate Of Milk Production:


In 1950 the production of milk was 17 million tonnes In 1996 the production of milk was 70.8 million tonnes In 1997 the production of milk was 74.3 mT In the recent years from 2009-2011 the production is 112mt The Projected rate of production of milk in 2020 would become 240 mT However so as to meet the rising demand of the consumer the production is expected to rise up to 220- 150 mt by 2020. If the above figures are achieved then India would be able to contribute to 30-35% to world's milk production.

Key Areas On Which The Dairy Farms Depend In India:


The competitive nature, the cost of production and the productivity of the animals: The demands for not only the milk products are on demand but the quality is the important craze. So the lower the cost of production of the milk the profit would be more and the competitive market would also get enhanced. Moreover the quantity of animals is also to be increased and a better health care are to be provided to them. Proper care should be given t the cycle of production, processing and marketing of the commodities so produced. Proper legal backups are to be taken to increase the quality so that it can compete and be at ape with the international standards. The countries dairy farms must utilize their resources well and make the final products that come easy of these sources. As India is the leading house of buffalos then it must concentrate on making much more of Mozzarella cheese and target them to the audience. The country should import high and higher value of milk products than lower values as this would help them to meet up the challenges of the growing international produce.

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To increase the scope of milk production proper investments are to be done and they come in good opportunities in this sector. Apart from the main stream of dairy production some of the literally opposites, though linked in some way or other, finds a good ground of investments that can boost up the production and other grounds in dairy farming. They are as under:

The investor would invest to bring out the finest buffaloes and hybrid cows To bring in more dairy cultures, probiotics, dairy biologics, enzymes and coloring materials for food processing

To enhance fermentation derived foods and industrial products alcohol, citric acid, lysine, flavor preparations, etc.

Bio-preservative ingredients based on dairy fermentation, viz., Nisin, pediococcin, acidophilin, bulgarican contained in dairy powders.

To bring in quality dairy food processing equipments. To bring in good quality of food packaging equipment. To built in warehouse of north American and European qualities so to enhance the storing.

Industry Segments:

Cheese is growing at 15% per annum Ice-creams are growing at 15 % per annum Chocolates this mark as the 4% of the total sweet confectionary consumed by the people

Biscuits- this cover a wide range of production and contribute a huge in the industry

Bread and bakery products share a 37% and a 75% of the industries share. Fluid milk- the annual growth rate from 2010-2013 is 6.8 % Some of the other dairy products are like curd, ghee, khoa, powdered milk and soon that is much in demand in India and is widely consumed.

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Advantages Of Milk Industry In India


Due to high production of milk the scope of milk processing would also increase There is a improved purchasing power of the consumer The transport facilities are easy and are readily available The manufacture instruments of high quality are coming along Apart from the cooperative and public milk sectors there are certain upcoming private sectors

There is highly trained and wide recourse of man power The natural resource of the country is such wide that it gives scope for further widening.

To boost up the industry two major aspects are to be dealt with and they are 1. To introduce the value added products like condensed milk, cheese, khoa, ad even to fuel the baby foods. More over the chocolate and the ice-cream industry also have to increase their growth rate. 2. To enhance the export. The country should export quality good so too meet the levels of international market.

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Major Players Of Dairy Industry

Gujarat Cooperative Milk Marketing Federation


GCMMF: An Overview
Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. CRISIL, India's leading Ratings, Research, Risk and Policy Advisory company, has assigned its highest ratings of "AAA/Stable/P1+" to the various bank facilities of GCMMF.

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Members:

13 district cooperative milk producers' Union

No. of Producer Members: No. of Village Societies: Total Milk handling capacity: Milk collection (Total - 2009-10): Milk collection (Daily Average 2009-10):

2.9 million 15,322 13.07 million liters per day 3.32 billion liters 9.10 million liters

Milk Drying Capacity: Cattle feed manufacturing Capacity:

647 Mts. per day 3740 Mts per day

Financial Performance Of Industry

Sales Turnover 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Rs (million) 11140 13790 15540 18840 22192 22185 22588 23365 27457 28941 29225 37736 42778 52554 67113 80053

US $ (in million) 355 400 450 455 493 493 500 500 575 616 672 850 1050 1325 1504 1700

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Product Portfolio
Breadspreads:

Amul Butter Amul Lite Low Fat Breadspread Amul Cooking Butter

Cheese Range:

Amul Pasteurized Processed Cheddar Cheese Amul Processed Cheese Spread Amul Pizza (Mozarella) Cheese Amul Shredded Pizza Cheese Amul Emmental Cheese Amul Gouda Cheese Amul Malai Paneer (cottage cheese) Utterly Delicious Pizza

Mithaee Range (Ethnic sweets):


Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom) Amul Amrakhand Amul Mithaee Gulabjamuns Amul Mithaee Gulabjamun Mix Amul Mithaee Kulfi Mix Avsar Ladoos

UHT Milk Range:


Amul Shakti 3% fat Milk Amul Taaza 1.5% fat Milk Amul Gold 4.5% fat Milk Amul Lite Slim-n-Trim Milk 0% fat milk Amul Shakti Toned Milk Amul Fresh Cream Amul Snowcap Softy Mix

Pure Ghee:

Amul Pure Ghee Sagar Pure Ghee Amul Cow Ghee

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Infant Milk Range:


Amul Infant Milk Formula 1 (0-6 months) Amul Infant Milk Formula 2 ( 6 months above) Amulspray Infant Milk Food

Milk Powders:

Amul Full Cream Milk Powder Amulya Dairy Whitener Sagar Skimmed Milk Powder Sagar Tea and Coffee Whitener

Sweetened Condensed Milk:

Amul Mithaimate Sweetened Condensed Milk

Fresh Milk:

Amul Taaza Toned Milk 3% fat Amul Gold Full Cream Milk 6% fat Amul Shakti Standardised Milk 4.5% fat Amul Slim & Trim Double Toned Milk 1.5% fat Amul Saathi Skimmed Milk 0% fat Amul Cow Milk

Curd Products:

Amul Flaavyo Yoghurt Amul Masti Dahi (fresh curd) Amul Masti Spiced Butter Milk Amul Lassee

Amul Icecreams:

Royal Treat Range (Butterscotch, Rajbhog, Malai Kulfi) Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza, Roasted Almond) Nature's Treat (Alphanso Mango, Fresh Litchi, Shahi Anjir, Fresh Strawberry, Black Currant, Santra Mantra, Fresh Pineapple) Sundae Range (Mango, Black Currant, Sundae Magic, Double Sundae) Assorted Treat (Chocobar, Dollies, Frostik, Ice Candies, Tricone, Chococrunch, Megabite, Cassatta) Utterly Delicious (Vanila, Strawberry, Chocolate, Chocochips, Cake Magic)

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Chocolate & Confectionery:


Amul Milk Chocolate Amul Fruit & Nut Chocolate

Brown Beverage:

Nutramul Malted Milk Food

Milk Drink:

Amul Kool Flavoured Milk (Mango, Strawberry, Saffron, Cardamom, Rose, Chocolate) Amul Kool Cafe Amul Kool Koko Amul Kool Millk Shaake (Mango, Strawberry, Badam, Banana)

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BCG MATRIX OF AMUL

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Nestle
Nestle India is a subsidiary of Nestle S.A. of Switzerland. With a market cap of Rs.35,000 crores it operates with seven factories and a large number of co-packers. The main business includes manufacture of Milk products. It specialises in infant food, while the other products in this range are ghee, dahi & dairy whitener. It also has a diversified product chain like prepared dishes & cooking aids the major one being Maggi, others are sauces, pasta, beverages like coffee & iced and instant tea. Nestle is also known for its chocolate & confectionery range the major brands being Kitkat, polo & bar-one. The sale is not only limited to India but also abroad. The company marked a steady growth in 2010 with Rs. 1,000 crores as revenues & a net profit margin of 15%. It has been acknowledged amongst Indias Most Respected Companies and amongst the Top Wealth Creators of India.

Nestle Operates in following business domains in India:


Milk Products & Nutrition- 44% of Sales Beverages-21% of Sales Prepared Dishes & Cooking Aids-20% of Sales Chocolates & Confectionery-15% of Sales

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Product Portfolio

Milk Products & Nutrition:

India's organized milk and milk products industry is growing at a growth rate of nearly 30% and expected to become $ 2.4 billion industry by 2010. Nestle is a dominant player in this sector only behind Amul. Brands NESTL EVERYDAY Dairy NESTL EVERYDAY Ghee NESTL Fresh 'n' Natural Dahi NESTL NESVITA Fruit Yoghurt NESTL EVERYDAY Slim NESTL Fresh 'n' Natural Slim Dahi NESTL MILKMAID NESTL Milk NESTL Jeera Raita NESTL MILKMAID FUNSHAKES NESTL NIDO NESTL CEREVITA NESTL NESVITA Prepared Dishes & Cooking Aids Nestle has strong presence in category with following product line. Maggi is the market leader in Instant noodles category. Brands MAGGI 2-MINUTE Noodles MAGGI Vegetable Atta Noodles MAGGI Dal Atta Noodles MAGGI Rice Noodles Mania MAGGI Sauces MAGGI Healthy Soups MAGGI MAGIC Cubes MAGGI Healthy Soup- Sanjeevni

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Beverages: Brands Nescafe Classic Nescafe Sunrise Nestle Milo Nescafe Milds

Chocolates & Confectionery: Brands NESTL KIT KAT NESTL KIT KAT LITE NESTL MUNCH NESTL MUNCH POP CHOC NESTL MILKYBAR NESTL MILKYBAR CHOO NESTL BAR-ONE NESTL FUNBAR NESTL Milk Chocolate NESTL Eclairs POLO NESTL TANG EEZ

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SWOT Analysis Of Nestle Confectionary


STRENGHTS The strengths of Nestl confectionary products including Kit Kat, Polo & Fox are as follows: Companys name Nestl signifies the quality image high standard and quality product. Loyalty from customers is also the major strength for the company. Employees are also loyal due to the decentralized culture of company. People trust on products due to the proper health and safety measures. The strength of Nestl confectionary is its imported chocolates and candies, which strengthens its image. Being a multinational company it has the capability to attract more customer than the local companies. Company has the ability to compete in a dynamic environment. Company always adapts the new technology. WEAKNESSES The weaknesses are as follows: There is not much margins for retailers to prefer its sales. They need to improve the facilities like chillers. The distribution cost is high as compared to the competition in the local market. Company mostly advertises its milk products, advertisement of confectionary products is not so better.

OPPORTUNITIES
They have an opportunity to expand or capture the market by adding its product line. They have the opportunity to offer snacks. They can also capture the market of home appliances. Company can open separate stores to eliminate retailers. Recently, they have created an opportunity for themselves by introducing chillers in the market. Company is trying to open stores in universities. They can provide incentives to retailers to increase sales volume. Company can enter in ice cream products

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THREATS
Existing companies are increasing their product lines that can prove to be a threat in the coming years. Company like Cadbury is giving more discounts to retailers as compared to distributors due to which retailers prefer its products for sale. As compared to the local competitors, our distributor cost is very high. As Nestl confectionary Products has to maintain and obey the Nestl standards. Some companies are competing on the basis of cost.

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BCG Matrix Of Nestle

STARS The stars are the high relative market share and high market growth. Nestle beverages i.e. are somewhat the stars in their business, because with the high quality and new designs which comes every now and then makes them more popular among the customers, because customer with upper class wants the quality and nestle offers the best quality food items. CASH COWS The cash cows are their baby food items i.e. nestle cerelace and other baby food products. Company has to take measures to make these products as stars. DOGS The pharmaceutical products are nestle Dog, because it has low-share business with low growth market especially when we talk about Pakistani market. The company has to think on what it can do by improving the low share and growth market.

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QUESTION MARKS The question marks are the breakfast cereals. They have high market growth but low market share. The company has to decide about which question mark they should try to build into the stars and which one of these should be phased out.

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Financial Performance of Nestle

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Britannia

The story of one of India's favourite brands reads almost like a fairy tale. Once upon a time, in 1892 to be precise, a biscuit company was started in a nondescript house in Calcutta (now Kolkata) with an initial investment of Rs. 295. The company we all know as Britannia today. The beginnings might have been humble-the dreams were anything but. By 1910, with the advent of electricity, Britannia mechanised its operations, and in 1921, it became the first company east of the Suez Canal to use imported gas ovens. Britannia's business was flourishing. But, more importantly, Britannia was acquiring a reputation for quality and value. As a result, during the tragic World War II, the Government reposed its trust in Britannia by contracting it to supply large quantities of "service biscuits" to the armed forces. As time moved on, the biscuit market continued to grow and Britannia grew along with it. In 1975, the Britannia Biscuit Company took over the distribution of biscuits from Parry's who till now distributed Britannia biscuits in India. In the subsequent public issue of 1978, Indian shareholding crossed 60%, firmly establishing the Indianness of the firm. The following year, Britannia Biscuit Company was re-christened Britannia Industries Limited (BIL). Four years later in 1983, it crossed the Rs. 100 crores revenue mark. On the operations front, the company was making equally dynamic strides. In 1992, it celebrated its Platinum Jubilee. In 1997, the company unveiled its new corporate identity "Eat Healthy, Think Better" - and made its first foray into the dairy products market. In 1999, the "Britannia Khao, World Cup Jao" promotion further fortified the affinity consumers had with 'Brand Britannia'. Britannia strode into the 21st Century as one of India's biggest brands and the pre-eminent food brand of the country. It was equally recognised for its innovative approach to products and marketing: the Lagaan Match was voted India's most successful promotional activity of the year 2001 while the delicious Britannia 50-50 Maska-Chaska became India's most successful product launch. In 2002, Britannia's New Business Division formed a joint venture with Fonterra, the world's second largest Dairy Company, and Britannia New Zealand Foods Pvt. Ltd. was born. In recognition of its vision and accelerating graph, Forbes Global rated Britannia 'One amongst the Top 200 Small Companies of the World', and The Economic Times pegged Britannia India's 2nd Most Trusted Brand.
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Today, more than a century after those tentative first steps, Britannia's fairy tale is not only going strong but blazing new standards, and that miniscule initial investment has grown by leaps and bounds to crores of rupees in wealth for Britannia's shareholders. The company's offerings are spread across the spectrum with products ranging from the healthy and economical Tiger biscuits to the more lifestyle-oriented Milkman Cheese. Having succeeded in garnering the trust of almost one-third of India's one billion populations and a strong management at the helm means Britannia will continue to dream big on its path of innovation and quality. And millions of consumers will savoir the results, happily ever after.

Britannia reinstates focus on premium segments, enters new segments


Britannia has been under significant pressure across segments but it has been able to hold its own in the premium segment, helped by the aggressive entry of ITC and Parle, which expanded the market for premium products. The management believes it leads the value added biscuit space, which offers better pricing power. Britannias brands span two broad areas: (1) delight and lifestyle (comprising brands like GoodDay, Treat, 50-50 and Pure Magic), and (2) health and nutrition (comprising Tiger, Milk Bikis, Marie Gold and Nutrichoice). Britannia devised a multi-pronged strategy that aims at cost cuts at one end and creating consumption opportunities and product variants at the other.

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Britannia launched biscuits like Nutrichoice, Nature Spice Cracker, Britannia Cookies and Britannia Top. It has entered a milk-based product segment like Tiger Zor Choco Milk and ActiMind (Britannia Dairy). Treat Choco Decker, a mix of jam, chocolate and biscuit, is targeted at children. Britannia also offers vegetarian cakes and breads. Britannia is promoting Rs5 packs of cookies and premium products like Good Day,Treat and Marie. We believe the focus on premium variants and on-the-go consumption (over 10% of Britannias sales) would result in continuing mix improvement in the biscuit industry over the next few years. This would benefit Britannia as it has a strong presence in value added segments. We estimate margins in value added sub-segments like cookies, cream and Marie are 1.5-2x EBITDA margins of the base Glucose variant.

Worst seems to be over as sequential margin recovery begins


Britannia posted its lowest EBITDA margins in the recent past and an EBITDA loss in 4QFY10. But with sugar prices declining by 38% from their peaks and wheat prices relatively benign, margin recovery is underway. EBITDA margins rose 570bp sequentially

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SWOT Analysis of Indian Dairy Industry


Strengths:

Demand profile: Absolutely optimistic. Margins: Quite reasonable, even on packed liquid milk. Flexibility of product mix: Tremendous. With balancing equipment, you can keep on adding to your product line.

Availability of raw material: Abundant. Presently, more than 80 per cent of milk produced is flowing into the unorganized sector, which requires proper channelization.

Technical manpower: Professionally-trained, technical human resource pool, built over last 30 years.

Weaknesses

Perishability: Pasteurization has overcome this weakness partially. UHT gives milk long life. Surely, many new processes will follow to improve milk quality and extend its shelf life. Lack of control over yield: Theoretically, there is little control over milk yield. However, increased awareness of developments like embryo transplant, artificial insemination and properly managed animal husbandry practices, coupled with higher income to rural milk producers should automatically lead to improvement in milk yields. Logistics of procurement: Woes of bad roads and inadequate transportation facility make milk procurement problematic. But with the overall economic improvement in India, these problems would also get solved. Problematic distribution: Yes, all is not well with distribution. But then if ice creams can be sold virtually at every nook and corner, why cant we sell other dairy products too? Moreover, it is only a matter of time before we see the emergence of a cold chain linking the producer to the refrigerator at the consumers home! Competition: With so many newcomers entering this industry, competition is becoming tougher day by day. But then competition has to be faced as a ground reality. The market is large enough for many to carve out their niche.

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Opportunities
"Failure is never final, and success never ending. Dr Kurien bears out this statement perfectly. He entered the industry when there were only threats. He met failure head-on, and now he clearly is an example of never ending successes! If dairy entrepreneurs are looking for opportunities in India, the following areas must be tapped:

Value addition: There is a phenomenal scope for innovations in product development, packaging and presentation. Given below are potential areas of value addition: o Steps should be taken to introduce value-added products like shrikhand, ice creams, paneer, khoa, flavored milk, dairy sweets, etc. This will lead to a greater presence and flexibility in the market place along with opportunities in the field of brand building. o Addition of cultured products like yoghurt and cheese lend further strength both in terms of utilization of resources and presence in the market place. o A lateral view opens up opportunities in milk proteins through casein, caseinates and other dietary proteins, further opening up export opportunities. o Yet another aspect can be the addition of infant foods, geriatric foods and nutritionals.

Export potential: Efforts to exploit export potential are already on. Amul is exporting to Bangladesh, Sri Lanka, Nigeria, and the Middle East. Following the new GATT treaty, opportunities will increase tremendously for the export of agri-products in general and dairy products in particular.

Threats
Milk vendors, the un-organized sector: Today milk vendors are occupying the pride of place in the industry. Organized dissemination of information about the harm that they are doing to producers and consumers should see a steady decline in their importance. The Indian dairy industry, following its delicensing, has been attracting a large number of entrepreneurs. Their success in dairying depends on factors such as an efficient yet economical procurement network, hygienic and cost-effective processing facilities and innovativeness in the market place. All that needs to be done is: to innovate, convert products into commercially exploitable ideas. All the time keep reminding yourself: Benjamin Franklin discovered electricity, but it was the man who invented the meter that really made the money!

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PEST ANALISYS
Political Sector
Tetra Pak follow its rules and regulations very strongly and perfectly. Like they have certain rules in case of hiring employees as they hired employee for long-term careers, and they always seek for people who are goal-oriented, team players, self-confident, humble and those who balanced results and relationships. Moreover themanagers have to dress properly and formally and have to treat each other with courtesy. They paid their employee above-average compensation.

Economic Sector
Tetra Pak was the worlds largest producer of aseptic carton packaging for liquid foods including milk, juices ,and fruit drinks. It had global sales of $7 billion and employed 20,100 people in 165 countries. Tetra Pak grew rapidly through the 1980s. It held 80% of market shares of the worlds aseptic carton packaging market. It was aggressively dominant the market and give many types of packaging facilities by lowering the cost. Worldwide milk consumption grew from 213 billion litters in 1995 to 236 billions litters in 1999, representing 2.5% annual growth which as well as increased the sales of Tetra Paks.

Social Sector
According to social context, Tetra Pak had a good relationship with its employees and its marketers. They took information about their salespersons and keep a regular contact with them. They discussed and resolve marketing and sales problems and gave technical support, kept regular maintenances and discussed about financial issues. They were likely to do businesses that were innovative in marketing, willing to invest for long-term category growth and maintain high quality products. Again Tetra Pak used to keep good relationship with its customers. They worked closely with their customers in-house marketing by analyzing the market and even offering advice on product launch strategies, advertising and promotions. Tetra Pak helped to spread global knowledge among their customers as well as competitors which again helped to increase relationships among them. Moreover, as per the culture, Tetra Pak enjoyed a strong corporate culture, evident in every one of its far-flung operations around the world. Tetra Pak was decentralized and entrepreneurial. They maintain five core values that they considered as key
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factors of success. These are Freedom with accountability Partnership with customers, suppliers, and colleagues Long-term perspectives Innovation and creativity.

Technical sector
Tetra Pak used to maintain good quality machinery or technology to serve its customers with best quality milk, juices, foods which were sealed at the bottom, filled with liquid, and sealed at the top below and surface to eliminate air space and maximize food safety. Companys most popular package was rectangular shape that was easy to stack and shrink-wrap on pallets. Their packages were ultra heat treated (UHT) which allowed to keep foods fresh for the long-time. Tetra packs packaging systems of the supply of both per-printed rolls of carton packaging materials and the filling equipment. It could make 22.000 packs per hour with its extreme capable equipments. Tetra Pak offered its customers the best technical service to maintain production machinery which would improve efficiency.

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Porters Five Force Analysis on Dairy Industry

Threat of New Entrants:


New entrants to an industry can raise the level of competition, thereby reducing its attractiveness. The threat of new entrants largely depends on the barriers to entry. High entry barriers exist in some industries (e.g. shipbuilding) whereas other industries are very easy to enter (e.g. estate agency, restaurants). Key barriers to entry include Entry barriers are high because the major part of market is with the few players. Intense Competition-Sustaining is difficult among existing big players Legal barriers are more as they are dealing in dairy product which is consume able they have to maintain the quality and have to pass through many quality checks.

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High capital investment in initial years Customer switching costs is very low so from costumer side the threat increases. Access to industry distribution channels

Threat of Substitutes:
The presence of substitute products can lower industry attractiveness and profitability because they limit price levels. The threat of substitute products depends on: There is very low threat from substitute side because no perfect substitute is available in market, if we talk about the milk than only its possible. Variety in processed foods is high Local players offer low-priced substitutes The relative price and performance of substitutes

Rivalry Among Competitors


Highly Competitive: Presence of and competition from regional, national and international players; Switching cost Lake of diversity Hard to exit

Bargaining Power Of Customer


Buyers are the people / organizations who create demand in an industry. The bargaining power of buyers is greater when few dominant buyers and many sellers in the industry Products are standardized Product loyalty Price sensitivity Bargaining Power Of Customer is very Low

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Bargaining Power Of Suppliers


Suppliers are the businesses that supply materials & other products into the industry. The cost of items bought from suppliers (e.g. raw materials, components) can have a significant impact on a company's profitability. If suppliers have high bargaining power over a company, then in theory the company's industry is less attractive. The bargaining power of suppliers will be high when: many buyers and few dominant suppliers undifferentiated, highly valued products bargaining power of supplier is very moderate more substitutes are available in india

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Bibliography

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Reference
Marketing & Marketing By Ramaswamy Maketing Management By Phillip Kotler

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Conclusion

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