this document covers Dairy industry in India, Dairy Industry in Kerela, Porter's five forces analysis, Financials of Milma, Swot of Milma, Problem faced by milma and suggestions
2. MILMA: KEEPING UP WITH THE TRENDS
ABSTRACT
Consumer behaviour changes at the speed of light. On a yearly, quarterly, and even monthly basis,
new trends emerge, transforming the way we connect with a product. But keeping up with the
changes is sometimes not quite enough. To succeed, the key is to stay ahead of the game.
Changes in the consumer preference and behaviour happen because consumers change the way
they shop, research, and spend their time and money. Sticking to a reliable strategy might be
cheaper in the short-term, but listening and responding to the changes will actually benefit and
keep the business relevant in the long-run. This case deals with the various problems faced by
Milma during the financial year 2017-18 and suggests solutions and strategies that Milma can
implement in long-term, in the wake of the issues they had faced and the current issues to be
addressed, to remain the undisputed king of Keralaâs dairy market.
Keywords: Milma, eco-friendly packaging, biocompostable, Tetra Pak, probiotic, shelf life.
INTRODUCTION
Milma is the popular name given to Kerala Co-operative Milk Marketing Federation
(KCMMF). Milma started its operation in 1980 with its head office at Thiruvananthapuram,
Kerala. Started under the Indo-Swiss project launched in 1963 for the successful
implementation of the dairy programme âOperation Floodâ under the National Dairy
Development Board (NDDB), the project had made great strides in the improvement of
livestock farming in the state. Milma had been instrumental in achieving the national goal
of self-sufficiency in milk production in the state. Kerala enjoyed one of the highest
ranges of per capita milk consumption. KCMMF was totally content in the realization of
this vision and had achieved the distinction in its performance by close association and
bond with NDDB, Animal Husbandry Department and Dairy Development Department of
the State and Kerala Livestock Development Board. Over the years, Milma had
developed a long-term health perspective about the people of the state and had attuned
its products to ensure balanced nutrition as well as reduced cost of healthcare and also
launched new beverages other than milk products. It was founded on the basis of the
great democratic principle âof the People, by the People and for the Peopleâ.
In Kerala, milk and milk productshad high demand and it increased during festival seasons.
In the early stages, milk wassupplied by the federation and enjoyed monopoly in the supply
of pasteurized milk in the state. But after some time, other players started to enter the field.
Milma wasfighting itscompetitorswho offered dairy products at cheaper prices. Adding to
its concerns, its packaging also developed environmental concerns.
DAIRY INDUSTRY IN INDIA
Milk and milk products ranked as a large secondary source of income to the farmer of country. A good
number of Indiaâs population was engaged in the production, processing and marketing of dairy
products and many more were in needed to process, bottle and deliver fluid milk and other dairy
products. The White revolution achieved its first goal of boosting production and flooding the country
side with milk. It led to the sustained growth in the availability of milk and milk products. To meet the
growing demand of milk and products, there was a need to revamp the countryâs milk policy and
3. promote manufacture of high quality dairy products. There was a very good scope for new
entrepreneurs. The dairy industry involved processing raw milk into products such as pasteurized
4. milk, butter, cheese, yoghurt and ice cream using processes such as chilling,
pasteurization and homogenization.
India was the second largest producer of milk in the world in 2018, at 60.60 metric tonnes, after the
91.30 metric tonnes produced by the United States. In value terms, the Indian milk economy was
worth $132 billion in 2018 growing at a CAGR of 15-16%, out of which the organised milk economy
is only around 15%. It is estimated to grow by more than 100% by 2023, crossing a worth of $268
billion. The milk production in India accounted for about 10% of the total world output. India was
one of the low-cost milk producers in the world. To take advantage of this low cost of milk
production, multinational companies planned to expand their activities to India. This helped them
in marketing their products in foreign countries in the processed form.
Public and private agenciesdominated the dairy industry in India. The Anand Pattern, formed
in 1948 under the direction and guidance of Sardar Vallabhbhai Patel, was an integrated
cooperative structure that procured, processed and marketed the produce. It adopted modern
production and marketing techniques and received services so they could individually
neither afford nor manage. The Anand Pattern succeeded because it involved people in their
own development through cooperatives. The institutional infrastructure, village cooperative,
dairy and cattle feed plants, state and national marketing, was owned and controlled by
farmers. The leading players of the dairy industry in India were:
1. Amul Industries Private Limited: Founded in 1946 in Anand, Gujarat, it was
one of the leading dairy companies in India and was managed by the Gujarat
Cooperative Milk Marketing Federation Ltd. There were many brands that were
operated under Amul. Its product range included milk and milk products like
paneer, butter, cheese, ghee, ice cream, chocolate, milk powder, etc.
2. Karnataka Cooperative Milk Federation: Known for its quality products it distributed
into remote areastoo, the entire system, working through a chain of farmers, offered a
range of products milk products like paneer, curd and milk sweets, alongside milk.
3. Kwality Limited: Incorporated in 1992 as Kwality Dairy, it was one of the
leading private sector dairy companies in India with manufacturing units in
leading Indian states. With its huge presence in North India, it offered a range
of innovative products and was committed to fulfilling all quality standards.
4. Mehsana District Cooperative Milk Producers Union Limited: Popularly known as
Dudhsagar Dairy, it was founded in 1963, was one of the leading dairies in Asia
and was a member of the Gujarat Cooperative Milk Marketing Federation Limited.
5. Mother Dairy: Founded in 1974 in Noida, Uttar Pradesh, it was one of the top
dairy companies in India. Mother Dairy sold milk and milk products including
cultured products, ice cream, paneer and ghee. The company also had a
diversified portfolio with products in edible oil, fruits and vegetables, frozen
vegetables, pulses, processed food like fruit juices, jams, etc.
6. Schreiber Dynamix Dairies Limited: Founded in 1945 in Green Bay, Wisconsin
as Schreiber Foods and having acquired Dynamix Dairies Limited, it was one
of the leading dairy companies in India producing antibiotic-free milk and milk
products like cheese, yoghurt, ghee and butter.
7. Tamil Nadu Cooperative Milk Producers Federation Limited: Popularly known
as Aavin, it was registered in 1981 and was one of the leading dairy
companies in India. Located in Tamil Nadu, it produced milk and related
products like ghee, curd, yoghurt, cheese, ice cream, butter and milk sweets.
8. Orissa State Cooperative Milk Producers Federation Limited: Founded in
1985, its product range included milk and related products, horticulture
products, Kandhamal organic products and cattle feeds.
5. DAIRY INDUSTRY IN KERALA
Milk production in Kerala reached a volume of 3.5 billion litresin 2016, growing at a CAGR of
5.6% during 2010-16. The dairy market was expected to grow at a CAGR of around 6% till
2021, reaching a volume of 4.6 billion litres. The state wasone of the largest dairy markets in
India. The milk production in Kerala mainly consisted of cow milk and buffalo milk.
Kerala Cooperative Milk Marketing Federation Limited, popularly known as Milma, was
registered in 1980. Through the years, Milma had emerged asthe leading brand of Kerala and
its progress in the area of procurement and marketing of milk and milk products was worth
emulating. Itsproduct range included milk, ghee, curd, yoghurt, ice cream, milk sweets and
cattle feed. Though not all national players, but most of them did sell their productsin Kerala.
Porterâs Five Forces Analysis
1. Threat from the entry of new competitors: It wasvery high for the industry because of
the liberalization and privatization policies of the government. It was easy for new
companies or cooperative societies to enter, thereby challenging Milma.
2. Threat from substitute products or services: It was moderate to high for
Milma products as the substitutes for milk and related dairy products were
available in the market, some at even cheaper prices.
3. Bargaining power of customers: Customers had a high bargaining power since
there were a lot of local brands available in the market with considerably lower
price than Milma and with good quality products, if not better.
4. Bargaining power of suppliers: Suppliershad a moderate bargaining power in case of
milk, but could bargain in case of other dairy productslike ghee, butter, curd, etc.
5. Intensity of competitive rivalry: Milma was a monopoly in the past. But it started
facing stiff competition from other local brands as well as national players. With
good quality products available in the market, it was not an easy win for Milma.
There were more than 30 competitors in Kerala against Milma. Some of the major competitors for milk
were Malanadu Development Society, Tamil Nadu Cooperative Milk Producers Federation Limited, A-one
Milk Products Private Limited, Ksheera Enterprises, Balaji Milk Foods Private Limited, Sakthi Dairy, etc.
while milk products like ghee and curd faced competition from GRB Dairy Foods Private Limited,
Nambishanâs AGMARK Ghee, RKG Ghee, Namboothiriâs Food Products, Milky Mist Dairy, HATSUN Agro
Products and Malanadu Development Society and paneer faced competition from Milky Mist. While milk
powder faced stiff competition from Nestle EveryDay and Nido milk powder, Amulya and Sunfeast, ice
cream and chocolate faced fierce competition from Cadbury, Nestle, Amul, Uncle John, Lazza and
Merriboy. Fruit drinks by Milma were not so popular due to excessive competition by both carbonated
and non-carbonated fruit drinks.
MARKETING MIX OF MILMA
The four Pâs of Milma were:
1. Price: The price of the product was decided on the basis of the market share. Sales
promotional activitiesand price flexibility were also considered while deciding price.
While profit motivation wasalso a deciding factor, competitorâsprice, purchase power
of consumers, production cost, etc. were also important. The milk price wasestimated
on the basis of distribution costs and social obligation to the society. Discussions
were held with members before the price was determined.
2. Product: Any new product launch was on the basis of surveys conducted on
consumers for its acceptance. Consumer awareness was created for the
product and their responses were awaited, collected and evaluated.
6. 3. Place: The target market wasfirst identified and the productswere then established in
the mindsof the people. The right audience, like children, were hence targeted. The
products like ice cream, sip-up and chocolate were mainly targeted on them.
4. Promotion: Milma was not indulged in prominent promotional activities. Usage of
posters, calendars, stalls, billboards, etc. were certain tools used for the
promotion activities. Advertisements were used only when offers were provided.
FINANCIALS OF MILMA
Milma had been performing well in the sales of most of its milk products. The financial
year 2017-18 saw the introduction of new products like flavoured milk in metal cans and
milk shakes in Tetra Pak in different flavours were introduced to the market. The overall
turnover of federation for the last five years showed an increase in trend as noticed from
the graph for milk and milk product sales which can be referred to in Exhibit 1.
SWOT ANALYSIS OF MILMA
SWOT analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities,
and Threats involved in any business venture. The SWOT analysis of Milma is as follows:
Strength: Milma stood at the 9th position in the list of top dairy companies in India. It
produced high quality product as it held an ISO certification. It had adequate support
from NDDB and the government of Kerala since its plants were eco-friendly units.
Weaknesses:There was an increasing cost of procurement of raw milk and materials for cattle feeds. In
the past few years, Milma had inadequate sales outlets operating in rural areas of the state, faced a
shortage of milk supply during festive seasons and also lacked an effective research and development
department, which was considered an important arena in any organization. Low advertisement and
promotional activities for products other than milk were also pulling it behind in the dairy industry.
Opportunities:There was an immense scope for product diversification, as it had not tapped all the dairy
products. The organization could increase its goodwill and profit if it gave more emphasis on exports.
There were more opportunities to create demand in the rural areas. Milma could capitalize on the
support they obtained from the government in the form of subsidies and tax concessions. The
increasing level of advertisements and related activities could also lead to an increase in sales.
Threats: The increasing intervention of milk powders from various companies in the
market was a major threat to the cooperative. Inadequate availability of ilk during festive
seasons and an inflexiblre pricing mechanism led to change in customer preferences.
The seasonal fluctuations in the availability of raw materials for cattle feeds were also a
threat. The influx of new competitors also reduced the market share.
PROBLEMS FACED BY MILMA
1. Overshot milk procurement and pumping in of milk from other states
In 2018, Milma faced a crisis after milk production overshot its target by 20%.
Though it procured around 1.36 million litres of milk from dairy farmers on average
on a daily basis, it could sell only 1.31 million litres. The cooperative had in excess
of 50,000 to 60,000 litres of milk unsold every day. It transported the excess milk to
Tamil Nadu to convert it to milk powder, which threatened to sink the cooperative.
Milma was forced to rely on milk powder making units in Tamil Nadu to convert the
excess procurement since the only manufacturing unit in Kerala was shut. The
cooperative had to pay $4.64
7. to convert a litre of milk to milk powder, yet milk powder commanded a price of only
$2.02 in the international market.
This situation was further worsened when private companies from other states started
pumping 0.3 to 0.35 million litres of milk into the state and started selling them at lower
prices. Milma was unable to undercut the competition since it had to pay farmers the
best price in the country. Milma suspected that unscrupulous elements might have been
smuggling in low-quality milk from other states to make profits.
2. Shift to eco-friendlypackaging
In 2018, Milma was selling 2.4 million packets of milk on a daily basis. Considering the ill
effectsof plastic to the environment, Milma had to find an alternative to itsplastic packaging.
Biocompostable plastic was considered as an alternative for the same. But research was
going on to ensure that the material was truly compostable and was safe to package
food products. Milma was the first major organization to in Kerala to consider switching
to more environment-friendly packaging. Meanwhile, it had also invited tenders for cloth
or compostable carry bags for packaging its products.
STRATEGIES FOR ADOPTION
1. Introduction of more variations to its existing portfolio
Keeping in mind the increasing inclination of Indian population towards healthy and tasty
products, Milma should introduce more variations to its existing product portfolio such as,
flavoured curd like Amul Flaavyo and probiotic curd like Amul Probiotic curd and Mother
Dairy advanced curd.
2. Upgrading packaging quality and shift to eco-friendly packaging
By upgrading itscurrent packaging facility by adopting Tetra Pak (a food carton in the form of
a tetrahedron) packing technology, Milma could increase the shelf life of milk. Though Tetra
Pak cannot be recycled as normal paper waste and needsto go to special recycling units for
separation of different materials, Milma is currently working on joint ventures with local
governments around the country to increase the number of recycling facilities.
3. Supplying Ultra-High Temperature (UHT) milk
The UHT treatment is the most used process to prolong the shelf life of milk. After the
UHT process, the milk is cooled and packaged in an aseptic carton that can be stored in
room temperature up to six months without refrigeration and preservatives, making it a
convenient and safe choice for consumers.
4. Milma Parlours
Capitalizing on its popularity in Kerala, Milma should open up a parlour of its milk and
milk products in the state the way Saras Dairy has incorporated in the state of Rajasthan.
CONCLUSION
The study indicates that though the market share of Milma has not fallen to an
unsatisfactory level, but the inertia to adopt modern marketing strategies has caused its
8. competitors to grab a substantial slice of market share pie. The findings indicate that the
consumer affinity towards the federation can be further improved if it swiftly adopts the
suggestions and strategies provided above in the view of a wholesome approach.
REFERENCES
Aabha Raveendran, âMilma for an eco-friendly shiftâ, The Hindu, May 10th, 2018,
accessed 18th Feb, 2019, https://www.thehindu.com/news/national/kerala/milma-for-
an-eco-friendly-shift/article23829555.ece
âAmul adoptsTetra Pak technology for processing packagingâ, Economic Times
Retail, 10th September, 2013, accessed 18th Feb 2019,
https://retail.economictimes.indiatimes.com/news/food-entertainment/grocery/amul-
adopts-tetra-pak-technology-for-processing-packaging/22464210
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cheaper rivals, OnManorama, June 5th 2018, accessed 19th Feb 2019,
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problem-plenty-but-cannot-take-on-cheaper-rivals.html
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Milma- Kerala Cooperative Milk Marketing Federation Ltd., âFermented Productsâ,
accessed 21st Feb, 2019, https://kcmmf.in/index.php/product/fermented-products
Milma- Kerala Cooperative Milk Marketing Federation Ltd., âAnnual Report 2017-
18â, accessed 21st Feb, 2019, https://kcmmf.in/images/tender/AGM_2017-18n.pdf
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Group, https://www.imarcgroup.com/dairy-industry-in-india
9. Exhibit 1
Overall Turnover Trend of the Federation from 2013-14 to 2017-18 in million USD
Turnover
25
$23.64
$21.43
20
$18.19
15
$16.10 $15.98
10
5
0
2013-14 2014-15 2015-16 2016-17 2017-18 FY
Created by authors using data from the original document âMilma 2017-
18 Annual Reportâ, https://kcmmf.in/images/tender/AGM_2017-18n.pdf