Category Management Analysis

Conducted at

(Easy Day, Local Kirana Stores and Sweet shops)

Submitted in Partial Fulfillment of the requirements of the

Project to

Dwarika Prasad Uniyal

(Course Faculty)

On

(12th September 2013)

By

Piyush Raj & Pratik Vinod Gaokar

Students

Post Graduate Diploma in Management

IIM Kashipur

Project Title: Detailed Market Survey on consumption of Milk

(All types and Yogurt)

Background of the Researchers:

Piyush Raj, Engineer, National Institute Of Technology Surat

Pratik Vinod Gaokar, Engineer, D.J. Sanghvi Collage of Engineering

Course to which project belongs: Marketing Management-1

Term in which the Project is to be evaluated/ credited: Term-1

Executive Summary:

In an age where nutrition is increasingly seen as an appendage to daily living,

we tend to lose out on various vitamins and minerals.

For instance, most of us believe that milk only provides calcium and is only

meant for children. But did you know that, no matter the age, we can always

benefit from skimmed or low-fat milk varieties. And when picking which milk to

drink, there is lots of choice today. Today we're looking at the different types of

milk available in grocery stores and their health benefits.

As the world’s largest producer and consumer of milk products, India represents

one of the world’s most lucrative dairy markets.

Focus of the analysis:

o Buying behavior

o Price sensitivity

o Consumer awareness of value added products

o Brand loyalty and switching trends

o Potential of value added dairy products in India

Objective of your study:

Understanding the types of drinking milk and yogurt purchase pattern and behavior of

consumer at retail store by doing primary market research. Understating the market share

of the whole drinking milk industry and brand share. Understanding of the point of

purchase, time and frequency of purchase, method of purchase, response of consumer for

promotion.

Introduction:

Drinking milk products continued to gain popularity, with consumers becoming more aware of

their nutritional needs in 2012 and 2013.

Manufacturers such as Nestlé India launched and pushed new products including

fortified milk such as Nestlé A+ with the help of advertising campaigns.

With a huge push from the manufacturers, drinking milk products such as flavoured milk and soy

milk started to gain popularity amongst urban consumers over the review period such as

flavoured milk and soy milk started to gain popularity amongst urban consumers over the review

period.

In 2013, average unit price set to post 9% rise, largely due to increasing commodity inflation in

2012.

Constant value sales of drinking milk products expected to increase at a constant value CAGR of

6% to reach Rs604.1 billion by the end the forecast period.

Gujarat Co-operative Milk Marketing Federation set to rule drinking milk products with a value

share of 13.1% in 2012 and continuing with 13.3% value share in 2013.

Newer launches in flavoured milk drinks and fruit-based drinking milk are likely to get good

responses over the forecast period.

Flavoured milk drinks is the fastest growing milk product type and is expected to see the fastest

current value growth of 31% to reach Rs12.6 billion.

Drinking milk products continue to be marketed and sold in their usual glass bottles, plastic

pouches and Tetra Pak packaging across pan India.

Fresh/pasteurized milk continues to be the largest contributor to the value sales of drinking milk

products and is sold in plastic pouches mainly due to the affordability attached to it.

In addition, Tetra Pak continues to become significant – especially in urban areas, as it is

considered safer and more hygienic.

Trends:

In 2012, drinking milk products’ growth tapered down slightly compared to the review

period’s current value CAGR, to reach 16%. The faster growth during the review period was

due to the newer products such as soy milk and long-life/UHT milk, which had smaller bases

and gained significant sales over the past few years.

Flavoured milk drinks continued to be the fastest growing product, with current value growth

estimated to be 31% in 2012. Due to its availability in Indian flavours such as elaichi

(cardamom), badam (almonds), kesar (saffron) and thandai and the continued perception of

milk as being healthy, consumers continued to buy flavoured milk increasingly.

Fresh milk continues to enjoy huge popularity amongst rural and urban consumers across the

country. However, with growing convenience needs and safety demand coupled with the

increasing per capita incomes, long-life/UHT milk has started to gain popularity amongst

urban consumers. To leverage on the trend, manufacturers such as Parag Milk Foods have

started to join the likes of Amul, Nandini and Nestlé by introducing UHT milk in Tetra Paks.

Soy beverages and soy milk brands such as Sofit and Staeta continue to gain value sales at a

steady pace. Soy beverages, namely soy milk, is set to post current value growth of 20% in

2012, driven by health-conscious consumers and also attributed to the small base. Despite

high nutritional benefits that soy milk claims to offer, it did not grow as tremendously in

2011 and 2012 in terms of absolute value sales. Soy beverages are challenged by low

awareness, lack of efforts by manufacturers to promote the product and having higher prices

than other types of drinking milk products.

The unpackaged milk market remained significant across the country where most of the

consumers continue to be price sensitive and unaware of the safety associated with packaged

milk. However, drinking milk products have transformed from loose milk to packaged

(pouched) milk which continue to gain popularity. Further, consumption of long-life/UHT

milk has gained popularity amongst educated urban families where family members do not

have time to buy milk daily and instead purchase their groceries over the weekend.

COMPETITIVE LANDSCAPE:

Gujarat Co-operative Milk Marketing Federation (GCMMF) under the brand Amul continues to

lead drinking milk products and is set to post a value share of 13% in 2012. Amul continues to

enjoy its established presence in dairy and trust that it has built amongst consumers over the

years. Further, the company has focused on strengthening its distribution by expanding retail

reach into rural and semi-urban India.

Most of the leading brands including Amul and Mother Dairy continued to maintain their value

shares in 2011 and 2012. GCMMF and National Dairy Development Board showed a steady

increase in their value sales mainly due to their growing penetration and distribution in tier II

cities.

Most of the dairy companies have launched value-added products such as flavoured milk, fruit-

based drinking milk, soy-based drinking milk, etc.

Domestic manufacturers including cooperatives continued to lead drinking milk products in 2011

and 2012. Since Indian consumers continued to be dependent on fresh milk largely, domestic

manufacturers with strong local distribution channels and strong local presence continued to rule.

Year 2011 and 2012 witnessed many launches in long-life/UHT milk by leading manufacturers

such as Nestlé India Pvt Ltd and domestic manufacturers such as Parag Milk Foods. In

September 2012, Parag Milk Foods made a foray into UHT milk by introducing Go Milk and Go

Slim and expanded its portfolio even further.

FUTURE PROSPECTS:

With consumers becoming nutrition consciousness and seeking convenient options, newer

products such as long-life/UHT milk and flavoured milk drinks are likely to gain more

popularity.

Flavoured milk drinks are likely to continue growing at the fastest rate over the forecast period

with consumers likely to become more health conscious. Further, manufacturers will play an

important role in pushing flavoured drinks to consumers by positioning such products as good for

health.

Average unit prices are expected to rise at a 1% constant value CAGR over the forecast period

due to increasing commodity inflation.

Drinking milk products – especially fresh/pasteurized milk, which constitutes the major bulk of

drinking milk products sales – will continue to be sold and marketed through milk parlors/ milk

booths of local dairy players. In addition, more companies will try to increase their presence in

not just big supermarkets but in smaller grocery stores to compete with the local domestic

players.

Local players such as Karnataka Cooperative Milk Producers Federation Ltd are likely to

introduce newer products such as flavoured milk to keep pace with the industry. Further, leading

players such as Gujarat Co-operative Milk Marketing Federation Ltd may introduce fortified

UHT milk and UHT skimmed milk to gain value shares.

Table 1: Sales of Drinking Milk Products by Category: Volume 2007-2012

Table 2: Sales of Drinking Milk Products by Category: Value 2007-2012

Table 3: Sales of Drinking Milk Products by Category:

(% Volume Growth (2007-2012))

Table 4: Sales of Drinking Milk Products by Category: % Value Growth 2007-2012

Table 5 Drinking Milk Products Company Shares 2008-2013

Table 6: Drinking Milk Products Brand Shares 2009-2013

Table 7 : Drinking Milk Products Prices 2009-2013

AMUL Vs. MOTHER DAIRY

Amul and Mother dairy are the two major players and top competitors with individual share of

13.6% and 11.3%.Both competitors offer variety of milk products(Drinking packaged milked,

UHT Tetra-packed Milk ,Diary whitener etc.)

In the research below we plan to analyze their Facebook campaigns, advertisement campaigns

and promotional and brand building strategies.

Amul Drinking Milk Product

Amul has covered all the milk product categories where it offers Amul Gold and Amul

Taza in Plastic packed Sachet Milk as well as in the form of Tetra Pack. Amul also offers

dairy whitener Milk Powder Amulaya and Sagar. Amul Spray is the brand used for Infant

Milk (Milk Powder for Babies) a category where it has captured 64% market share.

Amul Drinking Milk Products

Facebook Campaign

Amul Facebook campaigns are always related current affairs, ranging from politics,

and social media to sports which would feature the Amul girl adapted to that context,

with a catchy one-liner in the form of her opinion which actually would strike a chord

with the masses.

Campaign picture on Amul’s Facebook page after the statement of a Politician that

India we can still get food @Rs12 in India.

Campaign picture on 5th September 2013 when Popular Economist Raghuram

Rajan took over charge as the 26th RBI governor of India.

Campaign picture on 9th September 2013 when Indian Tennis Star Leander Pace

won US Open Title @ the age of 40.

Amul took humour route, to say ‘‘Eats milk with every meal’.

Amul’s Sponsorship

Amul has the history of partnerships for major sports events and was the official sponsor

of India Olympic team in London Olympics 2012.It had also sponsored F1 team “Sauber”

when first ever F1 race was organized on Indian Buddh Circuit.

Amul’s Olympic sponsorship campaign portraying different Athletic events.

Amul Campaign on Facebook when it sponsored F1 Sauber team when race was

conducted on Buddh Circulit India for the first time.

Amul sponsoring Netherland cricket team during World Cup 2011

Amul sponsoring popular TV show Masterchef which is worldwide know format for

cooking competition.

Amul Television Advertisement

Amul has been using the Tag line “Amul Dooth Peeta Hai India” (India Drinks Amul

Milk) in its all television commercials. Also the popular Amul girl which emotionally

connects to people directly and had been used for only Amul Butter earlier has been used

in all Amul products including Amul Milk. Amul targets different age group for Milk in

its television campaign. The commercial released in 2012 targeted age group of 5-10

years while the one televised in 2013 targets age group between 12-20 years

Snapshot from the Amul Commercial released in 2013

Mother Dairy Drinking Products

Unlike Amul which offers drinking milk in every milk category (Sachet Milk, Dairy

Whitener, Tetra Pack Milk) Mother dairy has concentrated on offering different varieties

of sachet Milk used for different purposes(Full Cream, Toned Milk, Standardized Milk,

Skimmed Milk etc.)Mother Dairy also offers milk in tetra pack.

Mother dairy products

Mother Dairy Campaign

Mother dairy initially started their advertisement campaign through their “Swaad

Pyaarka”(Taste of Love).Later on the campaign was changed to a popular one, “Maa

Jaise Koi Nahi” ( No one can replace the role that your mother plays). It highlights the

pivotal role that mother plays in our lives. The latest campaign moves from the health peg

to touch an emotional chord by portraying the unconditional love and care that a mother

has towards her child. The new positioning is a tribute to motherhood and the

communication revolves around relatable life situations depicting how children take their

mother’s love for granted, irrespective of their age. The objective is to gently remind the

kids of what all their mothers go through just to keep them happy, without ever expecting

anything in return. Mother Dairy also recently changed its packaging. The new look with

village graphics highlight the journey of milk – from the farm to consumers’ homes.

Mother Dairy Initial Campaign

Mother Dairy Outlets for Token Milk

Mother Dairy new campaign.

Yogurt:

Introduction

Yogurt or yoghurt or yoghourt is a fermented milk product produced by bacterial fermentation of

milk

Yogurt and sour milk products is expected to register a constant value CAGR of 18% to touch

Rs78.9 billion by the end of the forecast period

Gujarat Co-operative Milk Marketing Federation Ltd leads yoghurt and sour milk in 2011 and

2012.

Average unit prices increased due to rise in milk prices in 2012.

Drinking yogurt expected to see current value growth of 74% in 2012

Leading manufacturers focus on flavoured yogurt and probiotic yogurt

Current value sales of yoghurt and sour milk set to rise by 35% to reach Rs34.1 billion in 2012

Different brands of Yogurts

TRENDS:

With consumers increasingly demanding health and wellness and taste together, demand for

yoghurt and sour milk products grew tremendously over the review period. Consumers started to

accept and demand flavoured yogurt in Indian flavours including Mango, Pineapple and Vanilla.

Expect 2012 values sales growth of 35% for yogurt and sour milk products is in line with the

review period CAGR due to the strong growth in penetration year on year.

Driven by growing demand for health and wellness products, drinking yogurt continued to grow

at the fastest rate, and is expected to post a 74% rise in 2012. Interestingly, most of the drinking

yogurt brands in India are functional drinking yogurt with probiotics which are believed to be

good for health and hence continue to gain strength.

Average unit prices for yogurt and sour milk continued to increase in 2012 due to increase in the

raw prices of milk and milk fats. Average unit prices of drinking yoghurt and sour milk drinks are

only set to show a 6% increase in 2012. Many manufacturers including GCMMF and KMF

increased the prices of spoonable yogurt by Rs5/litre in 2012.

Though spoonable yogurt is set to constitute approximately 99% of the total yogurt value sales,

drinking yogurt continued to grow by 74% in 2012.

Leading companies such as GCMMF introduced flavoured yoghurts under the brand name

Flaavyo.To cash in the on growth of flavoured yogurt, Britannia Industries introduced flavoured

yogurt under the brand name Daily Fresh in September 2012.

Unpackaged yoghurt continues to account for significant volume sales of yoghurt and continued

to be prepared conventionally at home and in hotels as well. Unpackaged yogurt volume sales

continue to be quite strong in tier II cities and rural areas.

COMPETITIVE LANDSCAPE:

Due to strong presence in conventionally popular spoonable yogurt, long-established dairy

players including local players continued to lead overall yogurt and sour milk products in 2011

and 2012.

Karnataka Cooperative Milk Producers Federation, Mother Dairy Fruit & Vegetable and Gujarat

Co-operative Milk Marketing Federation Ltd continued to control a value share of 49% in

yoghurt and sour milk drinks in 2012. However, other dairy players including Parag Milk & Milk

Products started to focus on introducing flavoured spoonable yogurt, which was a big success.

Reliance offers a private label yogurt “Dairy Lite”; however, managing a supply chain and

enduring proper distribution of private label products on a pan-India level where cold chain

infrastructure is non-existent continues to be a big challenge.

Some local brands have started to offer spoonable packed yogurt which is 25% cheaper than the

known brands such as Amul.

All of these manufacturers also made an effort to position flavoured yoghurt as a healthy dessert

or snack option, rather than just being a meal accompaniment in India.

New players such as Danone Food & Beverages India introduced different flavours Vanilla and

Mango, which clicked well amongst consumers in 2012. Danone introduced smaller packs

starting from Rs15, which addressed the affordability concerns that usually restricts consumers

from taking up any new product.

2011 and 2012 experienced a flood of launches with the majority of them being in flavoured

yogurt. For instance new brands including Flaavyo from Amul, and Danone flavoured yogurt

from Danone Food & Beverages.

Flexible packaging continues to be the most popular and common packaging type in yoghurt and

sour milk products. However, spoonable yoghurt is marketed and sold in packaged plastic cups

with aluminium paper tops. Spoonable yoghurt is available in different cup sizes including small,

medium and large In addition, sour milk drinks such as drinking yogurt is marketed in long

plastic cups that can stand on shelves.

PROSPECTS:

With an increasing number of consumers likely to switch to packaged yogurt products are likely

to grow tremendously over the forecast period.

Value sales growth is likely to witness a slowdown over the forecast period. Yogurt and sour

drinks are likely to grow by a constant value CAGR of 18%

Pro/pre biotic drinking yoghurt is expected to register the highest constant value CAGR due to its

small base over the forecast period as well. However, the overall growth of yoghurt and sour milk

drinks will be driven by growth in plain spoonable yoghurt which is the largest contributor to the

sales of this category.

Average unit prices are likely to grow over the forecast period driven by the increase in prices of

milk and milk fat. Further, increasing commodity inflation and prices of fuel will increase

transportation costs. Additionally, manufacturers will focus on introducing value-added yogurt

including fortified and flavoured yogurt which will drive the unit prices even further over the

forecast period.

Local milk booths and milk parlours will continue to remain a significant sales channel for

distribution of yogurt and sour milk products.

Leading companies are likely to introduce value-added yogurt and sour milk drinks over the

forecast period. Companies will focus on adding flavours and fortifying products with vitamins to

attract health-conscious consumers. Additionally, companies will introduce yogurt products at

lower price points to penetrate tier II and tier III cities over the forecast period.

Most of the new product launches were well received in 2011 and 2012 and are also likely to do

well over the forecast period. New launches such as Danone’s Fundooz targeting children have

received an overwhelming response. Further, yogurt is likely to witness the entry of more

international manufacturers over the forecast period.

Table 7: Yogurt and Sour Milk Brand Share 2008-2013

Field Work

Easy Day:

First destination for our local market survey was Easy Day. We were denied from taking

interview of customers and Easy Day employees. On our request they allowed us to examine the

products available in milk category.

Following Milk products are available in this superstore:

S No. Type Of Milk Packaging Price

1 Sofit Soya Milk Tetrapack (1 ltr) 90

2 Amul Tazaa Tetrapack (1 ltr) 44

3 Nestle A+ Tetrapack (1 ltr) 61

4 Nestle Skimmed Milk Tetrapack (1 ltr) 64

5 Amul Gold Tetrapack (1 ltr) 51

6 Britania Dairy Whitener Pack (200 gms) 57

7 Nestle Everyday Dairy Whitener

Pack (200 gms) 74

8 Amul Kool Flavored Milk Can (250 ml) 30

Note: Sachet milk (plastic pack) is not available in this store.

As per conversation with the shopkeeper Amul is the most favored brand in the market and is

widely demanded by the customers at superstore.

Snapshot of the UHT Tertrapack and dairy Whitener in Easy day

Snapshot of the Flavoured Milk in Easy day

Snapshot of the Soya Milk Milk in Easy day

Local Kirana Stores:

We covered 3 kirana stores present in different locations of Kashipur to have detailed customer

preferences and demand in the market of various types of milk.

Generally people prefer to buy sachet milk for daily use. This sachet comes in pack of 500 ml. In

case of emergency or non-availability of sachet milk people prefer to buy Tetra pack milk which

is generally higher in price. During festive season and in March every year ( Fair in Kashipur),

the demand of milk goes up which results to increase in sales of sachet milk as well as Tetra pack

milk.

Two local brands of sachet milk is available in Kashipur market and surrounding.

1. Aanchal Milk

2. Gopal ji Milk

Aanchal Milk occupies major chunk of market. It is available on all major Kirana stores and milk

booths. Shopkeeper added that brands like Amul and Mother dairy failed to eastablished as the

Brand Achal was cheaper and with same quality

Price per Liter(Aanchal) : Rs34/- Price per Liter(Amul) : Rs42/-

Snapshot of the UHT Tertrapack and its shelfspace in Local Kirana Market

Snapshot of flavoured Milk and Packed Sachet Milk in Local Kirana Market

Snapshot of research @ Local Kirana Market

Sweet Shop and Restaurant: One of the main consumers of milk is generally sweet shops and restaurants. So we covered some

shops regarding their consumption and choice of type of milk they prefer. Since they have large

daily consumption, they buy milk from local dairy farms. During festive seasons due to shortage

of milk, sometimes they have to switch to Sachet and Tetra pack milk.

Earlier they use to buy milk from Aanchal milk distributors, but with the change of new

distributors they prefer not to buy the Achal Milk and prefer Dairy Farm Milk

Snapshot of research @ Sweet Shop

Customer Interview

When asked a customer who bought Aanchal milk as to why did he buy the brand said he is

satisfied with the quality.

He also added that he does not much option to choose from and Aanchal is a monopoly in

Kashipur but provides milk at reasonable and cheaper rate than the other well established brands.

When asked about whether he buys tetra packed milk he said he would buy it only during

emergencies and when the consumption of milk is immediate after purchase so that he does not

have to boil the milk and saves his time.

Online Survey:

We did online survey to analyze the brand preferences for milk .The survey had different

parameters in which we asked people regarding the type and brand of milk they consume. Also

the survey asked whether people have consumed yogurt and if yes then which brand of yogurt

they consumed. 94 people responded to the survey and below are some of the key highlights of

the research.

Brand Preference:

54.58 % people said they prefer Amul Milk followed by 13.14% people who prefer Mother

Dairy. Hence Amul emerges as the clear winner in the market survey that was done.

10% people prefer to buy fresh milk from local dairy shop and local dairy shop delivers the milk

at their home daily.

Full cream,tonned and standardized milk where the most categories of the milk preferd by the

survey respodendts.

68% of the people said they have consumed yogurt earlier while 23% said they never consumed

yogurt but are aware of it while 5% people did not heard of yogurt before.

Close to 50% people who consumed yogurt earlier prefer Yogurt from Amul while 30% people

have consumed yogurt by Mother dairy.

Inference and conclusion:

Fresh milk continues to enjoy huge popularity amongst rural and urban consumers across the

country. However, with growing convenience needs and safety demand coupled with the

increasing per capita incomes, long-life/UHT milk has started to gain popularity amongst urban

consumers. This led to the introduction of Tetra pack milk which has life of about six months

after production.

The unpackaged milk market remained significant across the country where most of the

consumers continue to be price sensitive and unaware of the safety associated with packaged

milk. Most of the rural areas consume unpackaged milk.

Gujarat Co-operative Milk Marketing Federation (GCMMF) under the brand Amul continues to

lead drinking milk products across India and has penetrated into urban as well as rural market.

Considering local market of milk, various regions have local players who generally dominate in

meeting demand of particular region, like Aanchal in Uttarkhand, Parag in Uttar Pradesh, Saras in

Rajasthan.

Most of the dairy companies have launched value-added products such as flavoured milk, fruit-

based drinking milk, soy-based drinking milk, etc. Flavoured milk drinks are likely to continue

growing at the fastest rate over the forecast period with consumers likely to become more health

conscious. They are easily available in all stores, restaurant, kirana shops.