Flavoured milk shakes up market; Britannia, Cavin's, Amul get aggressive

Competition in the Rs 800-crore augmented flavoured milk category in the country is increasing as new entrant Britannia Industries is eyeing top spot in the milkshake category while Cavinkare is set to enter the north Indian market.

Gujarat Co-Operative Milk Marketing Federation Ltd (GCMMF) and ITC, on the other hand, have planned to make deeper inroads.

All these companies are relying on innovation, launches, and competitive pricing.

Although Cavin’s, from the Cavinkare stable, holds a 13 per cent market share both in terms of volume and value, its distribution, spread over 100,000 retail outlets, is primarily in south India. On the other hand, Britannia, with an outlet count of 450,000, is the market leader in the east and has planned to further its expansion. Amul, with its focus on increasing backend milk sourcing, is keen on strengthening its distribution across the country. 

ITC, another new entrant in the field and whose Sunfeast Wonderz Milk milkshake brand had its market in south India, Odisha, and the Northeast, will sell the product in West Bengal.

“In nine months, suddenly, in this category, we have become the number two player. We are the largest in terms of distribution but second in terms of revenue. Our vision is in a year or so, with some expansion in terms of some more flavours and others, we should become number one,” Gunjan Shah, vice-president of sales and head of dairy business at Britannia Industries, told Business Standard.

Shah said the strategy was primarily to introduce more flavours like coffee and kesar badam. Apart from the basic Western flavours, which are mostly fruit- and nut-based, Britannia is working on Indian flavours. 

ITC, on the other hand, is creating its differentiator by relying on natural fruit juice and fruit pulp. Even for the vanilla flavour, ITC is using natural vanilla extracts. The leader, Cavinkare, while strengthening its flavour range, has taken a more target-based approach. It has planned to come up with five-six flavours aimed at consumer groups based on region or age.

“Innovation in this space is important. The products in the pipeline are based on specific consumer groups. While we came up with products for a fun-loving consumer, we introduced products for the health-loving consumer as well and now targeting the sweet-tooth consumer,” B P Ravindran, business head of beverages and dairy at Cavinkare, told this newspaper.

Amul, which is more focused on coffee, chocolate, and fruit variants, is also expanding its portfolio by introducing flavours like double-chocolate, dark chocolate, and other fruit flavours. “We are strengthening our backend milk sourcing, which will help us to launch at least two products every month. While value-added fresh dairy is a key focus area, we see good potential in milkshakes as well,” Jayen S Mehta, senior general manager, planning and marketing at GCMMF, told Business Standard. 

Despite the consumption slowdown, which brought down the growth rate in the segment from 22-23 per cent to 19 per cent in the last quarter, Ravindran said Cavinkare registered 1.7-1.8 times more growth than the category and was targeting similar revenue growth in this segment this year. 

On the other hand, the dairy segment in Britannia grew in high double-digits and Shah is optimistic that the new flavours, backed by its strong distribution network, will help Britannia become the largest milkshake company in 2020-21.

Asked about Britannia’s aggression, Ravindran said, “We welcome competition. It will help category growth. But three things are important for success — generating sales at retail stores, having a nimble manufacturing process, and innovation”. He said in the first quarter of the current financial year, Cavin’s generated 3.5 times more sales from retail stores over competition. Cavinkare has decided to double its retail outlets for milkshakes from the current level of 100,00, primarily in non-southern states, in the next five-six months. 

Cavinkare and Amul have their manufacturing plants for milkshakes while Britannia’s dairy-manufacturing line in Maharashtra is yet to come up, leaving the company dependent on others. Industry executives say having one’s own plants not only helps in rolling out products faster but also assures better quality control.