Tuesday, April 10, 2012: 09:43:33 AM

Food Processing Case Study

Indian cheese market has vast potential: MoFPI

Massive growth potential of the dairy product in the market; key players geared up for growth in demand

The organised cheese market including its variants such as processed cheese, mozzarella, cheese spreads, flavoured and spiced cheese, is valued at around Rs 4.5 billion. Processed cheese at 60% of the overall market is Rs 2.7 billion. The next most popular variant is cheese spread, claiming a share of around 30% of the total processed cheese market. The market is primarily an urban phenomenon and is known to be growing at around 15%. The market for cheese cubes, slices and tins is growing. The flavoured cheese segment has been constantly declining.

Gujarat Cooperative Milk Marketing Federation (GCMF) with the Amul brand continues to be the main operator in the branded cheese market in India. It pioneered the market for processed, branded cheese. What GCMF did was to develop the technology to make cheese from buffalo milk. World over it is made from cow milk.
Britannia Industries joined the fray in the cheese market in mid-1990s through an arrangement with Dynamix Dairy Industries (DDI). It was set up in 1995 by a consortium of five companies - Conwood, Indo Saigon, Hiranandani, ETA and Metro. DDI has capacity to process 500,000 litres of milk per day with an estimated investment of Rs 1500 million. The plant designed by Valio of Finland is run on technology tie-up with Schreiber Foods of the US. Schreiber is the largest supplier of processed cheese to fast food chains in the US with expertise in sliced cheese.
Britannia's cheese is sold in tins in the form of cubes, and in individually wrapped slices in packs of fives and tens. The slices are being promoted more aggressively worldwide, and these account for a bulk of cheese consumption. These are gaining acceptance in India as well. Amul followed Britannia in launching slices. Its cheese spread in the form of paste has been well received in the market.
Britannia has been concentrating on metros and large cities. The network covers some 60,000 dairy outlets equipped with cold cabinets, refrigerators and insulated boxes. Amul covers some 500,000 retail outlets.
Foreign brands
French cheese major, Fromageries Bel, a 10-billion French franc outfit, has entered the Indian market with La Vache Kirit or what is worldwide known as The Laughing Cow. Its target market to start with were the two metros of Delhi and Mumbai with distribution entrusted to Delhi-based Rai & Sons, distributors for premium food brands, Ferraro Rocher and Ricola. The Bel product will be produced at Bel's facility in Poland exclusively for the Indian market. La Vache Kirit is a guaranteed vegetarian product. Fromageries Bel is expected to widen its product portfolio by launching laughing Kirit (creamy cheese in cube form) and Babybel (semi-hard with a wax coating appropriate for sandwiches).
Laughing Cow was expected to be followed by an Austrian cheese brand, Happy Cow (owned by Woerle). Woerle has entered into a licencing arrangement with Veekay Foods & Beverages in Mumbai. Nestle and Kraft have also been planning to foray in the Indian market.
Foreign brands in India include Probolene, Colby, Mozzarella and Parmessan from Italy, Cheddar from Dutch, and Gryueve. The new entrants will have to compete with well-established players such as Amul, Britannia's Milkman and Dabur’s Le Bon, enjoying substantial market shares in the overall Indian cheese market. The US-based Philip Morris, which brought in its Kraft cheese brand earlier, has gained a significant presence in the market. The rest of the market is spread among Verka, Nandini, Vijaya and Vadilal.
The Dabon story
Dabur had forayed into the dairy products market through its joint venture company, Dabon International, which is a 50:50 joint venture between Dabur India and French dairy products major Bongrain. The company claimed a product range of 20 different varieties of cheese under LeBon brand. Dabon has a manufacturing facility at Noida with an installed capacity of 12,000 tonnes per annum. Incidentally, the government had, in a move in late April 2001, barred Dabon from marketing flavoured milk and processed cheese in the country.
Dabur was to launch speciality cheese like blue cheese and hard cheese. It had plans to develop cold chains at the distributor and retail levels in the state capitals and major towns in order to increase penetration levels.
Growth estimates
The demand for cheese is projected to grow from about Rs 4.50 billion in 2003-04 to Rs 6 billion in 2006-07 and to over Rs 11 billion by the terminal year of the projection period, 2014-15. Cheese is becoming a popular item in the menu of all relatively affluent families. Slowly but surely, it will penetrate into the rural markets.
The study was conducted by the Ministry of Food Processing Industries (MoFPI)

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