ITC, Coca-Cola, PepsiCo ramp up presence in milk-based beverages market

With nutrition and health on their mind, a growing list of companies have launched new brands or extended popular labels into the bustling ready-to-drink, milk-based beverages market in the country. Positioned as healthy alternatives to cola beverages and aimed at millennial buyers, Coca Cola, Britannia, Nestle and few regional players including CavinKare have stepped into the fray. However, the big challenge, apart from taking on legacy brands such as Amul and Mother Dairy in the segment, will be converting the still largely unorganised marketplace into a branded  arena.

Flavoured milk is the key focus for most brands, given that is the fastest growing product within the dairy-based beverages category. Hemant Malik, divisional chief executive, Foods Division, ITC that has launched ‘Sunfeast Wonderz Milk’ brand in the south said, “Our offering will contain real fruit pulp and real fruit pieces to provide better nutrition to the consumer This innovative range of milk based beverages will be powered by the company's institutional capabilities including agri-sourcing, distribution infrastructure among others.” 

ITC and others jumping on to the milk wagon are keen to emphasise the values of nutrition and health for their brands and point to the supply chain synergies that gives them the perfect platform to launch such products. At the same time however, the companies have to find ways to combat the price-value proposition that regional, unbranded players offer in the sector.

The new brand launches come in the wake of a sharp spike of milk supplies in the country. According to management consulting firm TechSci Research, “India is the largest producer of milk and dairy products in the world. The country has experienced tremendous improvement in per capita availability of milk over the last five years." A spokesperson for TechSci Research said that the organised dairy products market in India is witnessing growth, because of rising demand for functional dairy products, due to low fat and cholesterol content. However, the unorganised sector, which comprises small farmers, accounts for a majority share in India’s dairy products market, added the consulting firm

Consumers are seeking out milk-based drinks as they get more conscious about health and nutrition. Experts term such products as functional foods. Dairy products occupy a significant space in the functional foods market and dairy-based functional beverages are a growing segment. According to Euromonitor, the market size in retail value for sales for flavoured milk drinks grew to Rs28 billion in 2018 from Rs22 billion in 2017 and 17.8 billion in 2016. Between 2018 and 2023 it is expected to grow by 23.3 per cent CAGR (compound annual growth rate). 

The branded dairy-based beverages market is one of the fastest growing segments in the country and likely to become a billion dollar (Rs60 billion plus) market by FY21, said an earlier study by Tata Strategic Management Group. According to the study, published in 2016, only 22 per cent of the milk and dairy products consumed in India are in branded form, which presents a huge opportunity waiting to be tapped.

For cola brands, flavoured milk and other value-added products help balance the portfolio. The Rs220 billion carbonated soft drinks market has been slowing down as young consumers, especially, are seeking healthier options. They are hoping to tap into this demand and,  by offering milk-based products that are different from traditional offerings such as lassi, butter milk and plain milk, the companies expect to attract young consumers. Thus there is a profusion of innovative products such as oats milk, coffee milk and juices mixed with milk.

Coca-Cola India has launched Minute Maid Smoothie. The company spokesperson said that this marks its entry into a new space of ‘health and wellness’. In the first phase of the launch, the product will be available in Tamil Nadu, Karnataka, Telangana and Andhra Pradesh, followed by other states. According to the company spokesperson, the product was developed after listening to mothers and understanding their needs. 

Nestle India recently stregthened its dairy portfolio with the launch of its two ready-to-drink cold coffees, Chilled Latte and Intense Cafe. Arvind Bhandari, GM and senior VP, dairy, Nestlé India in an interview at the time of the launch said that a milk-based drink can only be created by players who have been in the dairy business and are well versed with all aspects of the milk chain, including sourcing, cleaning and processing. The company decided to use Nescafe, its coffee brand, to launch its new products while ITC has used a brand that kids and mothers are familiar with (Sunfeast) to introduce its new beverage. As the brands battle it out, milk has clearly moved away from  the kids-only menu.

The milky way

• Coca-Cola India has launched Minute Maid Smoothies, in two flavours (mango and banana). Initially the product will be available in Tamil Nadu, Karnataka, Telangana and Andhra Pradesh, followed by other states. Coke also has Vio, a flavoured milk brand that is available across the country
• ITC has launched a range of milk-based drinks under the label Sunfeast Wonderz. The launch markets are Karnataka, Telangana, Andhra Pradesh and Tamil Nadu. The company says it plans to go national soon
• PepsiCo has an oats and milk beverage, Quaker Oats+Milk, in two flavours, mango and almond. The drink was launched last year in 16 cities but with a special focus on the southern states. The product has been co-created with Sachin Tendulkar