Britannia to scale up milk sourcing across India, boost dairy business

Britannia Industries plans to scale up sourcing milk across India after the dairy products line in its Ranjangaon plant in Maharashtra becomes operational.

The company has 25-30 milk centres in Maharashtra that collect up to 25,000 litres of milk daily. It is expanding to have hundreds of such centres around the Ranjangaon plant.

The milk collected will be used to support its value-added dairy products, like cheese, business, as the company has decided not to enter the liquid milk business.

Britannia believes by direct sourcing milk will help it innovate and roll out quality value-added dairy products quickly. “It will be scaled up to hundreds of milk collection centres in the western part of Maharashtra in the coming days and eventually, we will have to go beyond Ranjangaon to other milk surplus states to source milk,” Gunjan Shah, the company’s vice president of sales and head of dairy business, told Business Standard.

Milk collection centres have to be within a 100-km radius of processing plants. Shah did not specify the amount needed to secure the back-end of Britannia’s dairy business, but estimated said the investment in setting up collection centres around Ranjangaon is likely to be in crores.

The dairy line in this mega food park may come up around 2021. 

Shah said while the company will bear part of the investment directly to manage the supply chain, partners, primarily in the logistics front, can be engaged.

“We will have greater control over quality of the milk and therefore we will also be able to develop new products faster”, he told this newspaper.

After coming up with cheese earlier, and then milkshakes in the last year, Britannia is expected to roll out yogurt and yogurt drink by Diwali this year.

“We have the distribution muscle and it allows us the strength to spread very fast. We are in around 4-5 lakh touchpoints. The Winking Cow brand (milkshakes) itself has helped us increase this (distribution) base by 2.5 times,” he said.

The company is of the view that in the past few years, the processed milk products market has witnessed sustained growth due to increased urbanisation, rising disposable income and proliferation of retail outlets beyond metro cities. While packaged liquid milk will remain a key driver of the industry growth, value added dairy products are expected to witness healthy growth and the overall organized sector’s contribution is expected to increase to 30 per cent of the industry by 2023.

Shah added that changing lifestyles is leading to a shift from home-made traditional dairy products like ghee and curd to packaged forms and the increasing awareness of nutrition and health benefits of various dairy categories like cheese and yoghurt is driving the growth in this space.