Dairy milk product market likely to see 25% growth by 2019-20

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Publish time: 16th July, 2014      Source: www.efeedlink.com
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July 16, 2014

   

   

Dairy milk product market likely to see 25% growth by 2019-20

   

   

   

The share of value-added dairy products (VADP) in the milk and milk derivatives segment in India is expected to grow by around 25% from now till 2019-20, Care Ratings stated in its dairy industry report.

   

   

The profitability in liquid milk space ranges 4-5%, whereas the profitability in VADPs ranges from 12% to 18%, attracting private participation in the industry.

   

   

The Indian dairy industry is witnessing growth backed by rising consumption and higher margins in the VADPs. According to the National Dairy Development Board, the Indian dairy industry is all set to experience high growth rates in the next eight years with demand likely to reach 200 million tonnes by 2022 from 132 million tonnes in 2013, the report said.

   

   

Increasing share of the VADPs in the overall dairy industry augurs well for the industry as the same is likely to drive sales and improvement in operating profits, resulting in better cash flow generation. Rising consumption coupled with better margins in VADPs are driving dairy players to get into the growth and higher profit trajectory, it said.

   

   

Product innovations are likely to accelerate India''s dairy market which is anticipated to improve industry margins by attaining greater scale, higher capacity use and an increasing contribution from new milk variants. Further, the development of processing and packaging technology along with improvement in retail and cold storage infrastructure has increased the shelf life of dairy products.

   

   

Rising disposable income, structural changes in food habits and better margins in the VADP segment lead the existing players to think beyond the traditional focus on liquid milk, the report observed.

   

   

Foreign investors have shown keen interest in the dairy space and have invested into slew of dairy companies in India. Recently, Groupe Lactalis SA, France, one of the largest dairy players in the world, acquired 100% of Tirumala Milk Products Pvt Ltd.