Milking the malls

Walk into any hypermarket, or even a city supermarket, and chances are you would notice rows and rows of plain milk in branded cartons, neatly stacked on colourful shelves, vying for attention with a plethora of dairy products: flavoured milk, soy milk, buttermilk, yogurt, curd, butter, cheese, paneer and ghee. Squint at the fine-print on packaging, and you will realise, as MBA student
M Meena did during a recent visit to a hypermarket near her college in West Bangalore, that carton milk requires no boiling and has a longer shelf-life of up to 180 days.

“I felt milk is not something people buy in malls,” says Meena, recalling the pleasant surprise at seeing as many as four brands of carton milk on four shelves sitting snugly next to 20 shelves of other dairy produce. Suitably enticed, Meena decided to try it out. Since boiling was not required, the milk would save her some precious morning time (and some cooking gas), the MBA student deduced.

Like Meena, communications professional Mahesh Senthil Kumar has been buying UHT milk (that is, ultra-high-temperature / ultra-heat-treated milk) for a few months now. Every ten days or so, he goes shopping for three or four cartons of UHT milk which he consumes with his morning cereals.

Meena’s usual breakfast, too, is cereals with milk which, she says, tastes “more or less the same” now with packaged milk. But when it comes to the cost, it is substantially higher (Rs50-60 for a litre of packaged milk against Rs24 for the local pouch) — a limiting factor for a student like her living in PG (paying guest) accommodation.

Once the sole preserve of neighbourhood milkmen (doodhwalas) riding bicycles weighed down by large, heavy cans and “milk booths”, processed milk is becoming part of India’s dairy industry, estimated by industry body Assocham to touch Rs5 lakh crore by 2015 on annual growth rate of 10%.

Even mom-and-pop corner shops stock packaged milk these days. For instance, at his 240 square feet provisions store in South Bangalore, K Vishwas has been selling Tetra Pak UHT milk since last year. His store now stocks 20 cartons at any point in time. Weekly sales touch 10-15 cartons, thanks to his strategic positioning of carton milk next to a host of regulars like biscuits, ready-to-eat mixes, jams and sauces.

Haneef KP, director — sales at MK Ahmed which runs six supermarkets in Bangalore, says that about 50 packs of UHT milk are sold at each of his outlets on weekdays, and 70 packs on weekends. “We  retail two brands and would like to add three more brands.”

Demand for packaged milk in metros is buoyant, reflected in 30% growth rate fuelled by city folks’ increasing preference for hygiene and convenience, says Vinod Menon, head, dairy business, Britannia Industries, one of India’s leading firms in the UHT milk market.

Relatively longer shelf-life, the ready-to-drink condition of UHT milk and growing income levels are driving demand for packaged milk, says P Rashmi Upadhya, managing consultant, PwC India.

Experts say UHT milk is often purchased on a weekly or monthly basis. Unlike flavoured milk which is purchased on impulse, there is an element of planning involved in buying UHT milk.

Given that scope is perceived as immense and that it is still early days, even smaller suppliers such as Parag Milk Foods are jumping on the packaged milk bandwagon. Parag is giving away samples at malls to induce trials, says chairman Devendra Shah.

“We are present in Bangalore, Mumbai, Pune and Chennai through institutional sales and modern retail outlets, and will reach more cities soon.”

Britannia’s Menon is convinced more and more people now using local milk will convert to UHT milk which the company has been selling since 2009 in eight major cities. Brittania, he says, plans to sell UHT milk in 35 cities by March 2013.

But not everyone thinks rivers of packaged milk will soon flow through India. Despite the convenience it offers, the retailer shelf space that UHT milk occupies is still very limited. Although an MK Ahmed supermarket (average size: 10,000 square feet) stocks up to 70 Tetra Paks of plain milk, bigger players tell a different story.

For instance, Max Hypermarkets allocates only about 10% of its 400 square feet dairy space (out of average 50,000 square feet at each of its ten megastores) to plain milk, according to Ponnu Subramanian, senior vice-president, buying, merchandising (foods).

Spencer’s Retail (average outlet space: 30,000 square feet) allots even less, just about 3.2% to dairy. Of this dairy space, only 15% is for milk. It is not that hypermarkets think UHT milk has limited appeal for price-conscious Indian consumers. Rather, milk is not a product like apparel or footwear that many people prefer buying at a mall, says Sanjesh Thakur, partner, Ernst &Young India, echoing MBA student Meena’s preconception. “It is usually home-delivered and people are habituated to boiling it. People also visit milk booths and buy packets during their morning walks.” For retailers, UTH milk is not a significant driver of growth. They don’t see it picking up substantial sales so as to threaten home-delivered milk.

Agrees Vishwas of the South Bangalore provision store. “Our intention behind stocking packaged milk is to ensure customers who want it don’t go back disappointed.”

Seemingly contradictory views may create an impression that uncertainty shrouds the future of packaged milk in India. But Subramanian of Max Hypermarkets is certain that UHT milk shelf-space will only grow, depending on the locality and consumer profile.

The science of packaged milk
Milk sold in Tetra Paks is referred to as UHT (ultra-high temperature treated) milk. As compared to a typical pasteurisation process (which is carried out by heating milk to 63 degrees Celsius for 30 minutes, or at 71 degrees Celsius for 15 seconds), UHT treatment heats milk for 1-2 seconds at a temperate above 135-140 degrees Celsius. Although most dangerous organisms are destroyed by the usual pasteurisation process, some kinds of bacteria remain and they could spoil the milk. The UHT treatment kills such harmful bacteria, extending the shelf life of milk up to six months, without any requirement to boil.

DAIRY DIARY

• According to the Global Agricultural Information Network, milk production in India is expected to touch 127 million tonnes in 2012, up 4.5% over the 2011 level
• According to the National Dairy Development Board, demand for milk is growing at 6-8% annually. Rural India consumes half of total milk sold
• Andhra Pradesh, Bihar, Uttar Pradesh, Gujarat, Punjab, Maharashtra and Haryana are the leading milk producing states
• Estimates by industry body Assocham predict the dairy industry size to reach Rs5 lakh crore by 2015, with
• the growth rate touching 10%
• The unorganised sector constitutes nearly 85% of the total dairy industry, with over 8 crore rural families engaged in dairy production