Mahanand Dairy in move to tap AP milk demand

Several cities in Andhra Pradesh including Hyderabad are expected to be flooded with new fresh milk brands.

Players of popular milk brands are ready to cross the state's borders as local co-operative unions and private firms have failed to meet the growing urban demand for milk.

In fact, a beginning has already been made. Mahanand Dairy, the milk-surplus Maharashtra state's apex milk co-operative body, has become the first outside player to cash in on the demand-supply gap prevailing in the state capital at the moment.

Mahanand brand, with toned milk priced at Rs 15 and standard milk priced at Rs 19 per litre was launched here today. The company expects to touch a daily sales of more than one lakh litres per day, said R A Rajeev, managing director of Mahanand, adding that there is a 30 per cent supply-demand gap in the city.

Though Amul and Nestle brand milk is freely available in the local markets in tetra paks, the daily supply of fresh milk in pouches is expected to be launched in Hyderabad and elsewhere in the state by these companies in the near future, according to market sources.

The volume that Mahanand is looking to achieve by the end of the year is no less when compared with the sales volumes of local players in the organised sector. Of the total daily milk sales of 12 lakh litres handled by the organised sector in Andhra Pradesh, the Vijaya milk brand, marketed by the State Dairy Development Corporation, is now just 2.75 lakh litres a day.

The original volume handled by the State Milk Co-operative Federation was around 4.20 lakh with the combined sales of the Mother Dairy (originally bulk vending arm of Vijaya Dairy).

It is now being taken over and marketed by the National Dairy Development Board (NDDB) under the Milk Drop brand name in Hyderabad and surrounding areas. The two big local private fresh milk brands, Heritage and Jersy, sell around 2 lakh litres each a day.

While Mahanand sells between 7 lakh and 7.5 lakh litres of milk a day only in Mumbai with the rest of the players just touching the half-way mark, its counterparts in Andhra Pradesh account for just 30 per cent of the total market share in the organised sector. While almost 50 per cent of the total market here is controlled by private players, the remaining 20 per cent demand is being met by the local milk vendors.

In contrast to the success stories of Anand (Amul) and Mahanand in the country, the co-operative movement in Andhra Pradesh has split with important district milk cooperative unions of Guntur, Krishna and Visakhapatnam and other districts declaring themselves independent under the Mutually-Aided Co-operative Societies Act of 1995.

These unions have now started marketing milk under their own brand names like Sangam and Visakha.

"Once the district unions became operationally independent under the new Act, they started focusing on the local market by cutting supplies to Hyderabad which has further widened the demand-supply gap," a government official told Business Standard.

When asked about the transportation costs involved and whether it will affect their margins, Rajeev replied, "It takes just six hours for us to bring milk to Hyderabad from Marathwada whereas some local players have to bring milk from Chittoor and Visakhapatnam to the city which takes even more time."

Rajeev, however, did not rule out the possibility of starting a local facility on its own or under a joint venture if the demand necessitates.