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Mother Dairy's BIG India plans
Amit Ranjan Rai | July 04, 2006
For most Delhiites, milk and Mother Dairy go together. For the past 30 years, lakhs have queued up at Mother Dairy booths for their daily requirement of milk - brand loyalty at its best? Not a shred of doubt. Reason: years of trust in the brand.
Mother Dairy was set up by the National Dairy Development Board under Operation Flood in 1974, to overcome Delhi's severe milk shortage. Today, far from being the capital's biggest milk supplier, the wholly-owned NDDB co-operative is the third-largest dairy player in the country (after Amul and Nestle) with a well-diversified product portfolio - not only a range of milk-based products, but also edible oils, frozen vegetables and fruit juices (the company has bold plans to make a foray into frozen foods, too).
And in the past couple of years, it has tried to spread its wings outside Delhi to other key cities as well. The move has been slow but sure. "Our aim is to garner bigger market shares in new markets," says an optimistic Paul Thachil, CEO, Mother Dairy India Ltd.
He's targeting a turnover of about Rs 2,100 crore (Rs 21 billion) for the current financial year, a significantly higher than last year's Rs 1,700 crore (Rs 17 billion). Does Mother Dairy really have a strong expansion and growth strategy?
In a nutshell, Mother Dairy wants to get into bigger markets and have bigger shares in those markets. The co-operative is also expanding its product portfolio further to match rival offerings - particularly those of Amul. For the first 22 years of its existence, liquid milk was the only dairy product that Mother Dairy offered.
It was in 1996 that it came up with ice-creams. But the real spurt came about four years ago, when it introduced curd, flavoured milk, lassi and mishti doi. It introduced butter a year-and-a-half ago; ghee and UTH milk a year ago; and cheese, about 10 months ago. And under its frozen foods and vegetables brand Safal, besides the introduction of corn and mixed vegetables, it has plans to come out with frozen potato-based snacks in a few months.
So while the product portfolio has been growing, Mother Dairy has plans for reach out to newer markets - but the strategy here is more product-specific. In liquid milk, it will initially concentrate only on four markets - Delhi, its home ground; the Junagarh region and Ahmedabad in Gujarat; Mumbai, which it entered a year ago; and Hyderabad, where it moved in a little more than a year ago.
Says Thachil, "We have no plans to go everywhere with liquid milk. What's the need to get into those markets that already have strong co-operative brands?" He cites the example of Karnataka Milk Federation's brand Nandini in Bangalore, which has been operating strongly in the region.
"Our objective of getting into newer locations is not to make Mother Dairy larger, but to ensure that there is a large viable distribution network and consumer brand to take care of surplus milk," he adds, reminding that Mother Dairy is still essentially a co-operative and not a corporate.
In Mumbai, where the liquid milk market is close to 40 to 42 lakh (4 to 4.2 million) litres a day, only about 20-22 lakh (2-2.2 million) litres a day is in the organised market - and that too is highly fragmented with a number of smaller players with shares of about 10,000-20,000 litres a day.
Mother Dairy claims a share of 170,000 litres a day, with the biggest player, Mahananda, selling about 800,000 litres a day and Aarey and Amul about 250,000-300,000 litres a day each.
In Hyderabad, Mother Dairy claims it has a 15 per cent market share of the approximate 9-10 lakh (900,000 � 1 million) litres a day of the organised market. "These are still early days in the two markets, but we are looking at 10-12 per cent growth in the overall fresh milk segment," says Thachil.
However, as far as other dairy products are concerned, Mother Dairy plans to expand across the board. "Other than milk, for most state federations, dairy products are still a small part of their operations. So we are taking our products to regions across India, where we see enough market potential," says Thachil.
In ice creams, it was only two years ago that Mother Dairy entered its first market outside Delhi - UP and Punjab. Today, it's extended its operation to Haryana, Jaipur, Mumbai and Kolkata as well. Next year, it plans to go south to Hyderabad and Bangalore.
In the case of butter and cheese, it's present across north India, Mumbai and Kolkata, and has plans to enter Bangalore by year-end. In UTH milk, it has entered Mumbai and the milk-short areas of West Bengal and north-east. For ghee, although the current focus is the northern region, it has plans for a nationwide presence.
As far as Mother Dairy's non-dairy products are concerned, edible-oil brand Dhara has already has nationwide presence.
While Mother Dairy still may not have a product portfolio as large as Amul, which is also expanding across the country in a big way and is a much bigger player, it's doing its bit. Mother Dairy says the idea is not just to enter new markets, but to do well in those markets - which means bigger market shares in the different product categories in whichever market it is present.
The drivers will be value created through quality of the offerings as well as innovations in products. This will, of course, be backed by relevant marketing and promotion campaigns.
Explains Thachil citing the example of ice creams, "We don't have a 60 per cent market share in ice creams in Delhi by chance. The differentiation for the consumer comes in taste and quality."
He points out that more Indianised flavours have done exceptionally well, something that the co-operative has constantly focused on. Apparently, its best-seller in take-home ice creams is not the regular Sundae, Jamaican Almond Fudge or Hazelnut Swril, but an Indianised Sundae called Shahi Mewa Malai.
Adds Thachil, "We are bringing in mass Indian flavours which are building up in terms of absolute percentage of contribution. Our attempt is to make the taste experience in ice creams as familiar as possible so as to increase consumption."
Take the case of curd. It started off very slow but today, Mother Dairy claims it's growing at close to 60 per cent year-on-year in Delhi. Here again, the Indian flavour formula seems to have worked.
"While curd from an MNC player is probably based on international formulation, we formulated it to taste as close to home-made curd as possible. If your offering fits well with the Indian consumer, the resistance is lower and acceptance more," says Mother Dairy's CEO.
On the marketing front, Mother Dairy says it's trying to take its product campaigns and communications to a higher platform. For instance, in the case of milk, the campaigns do not talk about the obvious benefits - milk is good for health, it has calcium and so on - but rather it targets children and are created around ideas such as "The country needs you, grow faster".
"We are saying we want children to achieve their ambitions faster. That the product is pure or healthy is a given for us," says Thachil.
As far as products such as butter, cheese and ice creams go, the campaigns have been created around "taste". For butter again, the focus is on children. "Amul butter may be selling the most, but the advertising and promotions are almost always targeted at adults," points out an analyst citing Amul's popular Utterly-Butterly campaigns.
Here, Mother Dairy has dared to go different. Since 60 per cent butter is consumed by kids, the company wants them to sit up and take notice of its butter. Makkhan Singh, a sturdy jovial cow (a cartoon character) has been made its brand ambassador.
While Mother Dairy has been carrying out school programmes - games and activities - involving Makkhan Singh in Delhi, it has plans to take such activities to Mumbai and Kolkata as well. It also runs a gaming website on the character to attract children.
It's cheese for children again. A couple of months ago, Mother Dairy carried out a retail activity: "Cheese khao superhero ban jao", where kids buying cheese at a retail outlet were invited for a photo op - dressed as superheros - through Polaroid cameras; and the framed photograph was presented to them. The activity was carried out in about 150 outlets in Delhi and Mumbai, with about 20,000-25,000 snaps being taken.
Cheese was also something that helped the company bond better with its retailers. In November 2005, retailers in Delhi displayed banners proclaiming, "Cheese ke saath bees ki cheez," a proposal that said if a consumer buys Mother Dairy cheese, the retailer can offer him anything worth Rs 20 from the shop - which worked better than offering something free with the product, which the consumer didn't even needs.Thachil claims that the exercise resulted in better ties with retailers. A positive response made Mother Dairy to repeat it in Kolkota as well. Clearly, Mother Dairy has aggressive plans. But, strong regional brands and other co-operatives will continue to give it tough competition. It will not be a cakewalk anymore.