Milk beverages; the next big battle ground? Reliance, Amul, Nestle in the fray

amul_logoWith entry of Reliance Retail in milk beverages and milk products through “Reliance Fresh” round the corner, the business of milk products including milk beverages has started simmering.

Speculation is rife in the market about the plans being pursued by Reliance for this product category. According to some reports, Reliance is believed to be taking over FMCG major Nestle’s dairy business. Nestle management, though, has rejected such a possibility outright. Another set of speculation revolves around the possibility of Reliance going in for alliance for contract manufacturing or co-branded marketing of milk products. The negotiations for such an alliance are said to be in advance stages with India’s biggest milk and milk products’ producer Amul as well as Nestle.

Amul- the country’s biggest Rs. 3774 crore food major, through a network of three million milk producing farmers as well as a number of milk processing dairies, has on an average procured and processed 6.4 million kg. of milk every day, during the previous year. Amul sold milk in pouches alone worth Rs. 900 crore, during the year. The Rs. 2475 crore, Nestle on the other hand has its dairy business centered in Punjab. Around 85,000 farmers supply milk to Nestle’s plant in Moga.

Two third of the milk beverages’ market, pegged at 2% (or Rs. 150 crore) of the Rs 7,500 crore beverage market, in the country, is presently controlled by Amul. The market is growing fast with customers becoming health conscious and a lot of negative publicity associated with carbonated drinks, particularly colas. Although, major food and beverage players like Britannia and Coca Cola have earlier failed to make a mark in this segment, they are believed to be mulling over re entering the business. Despite, threats being posed by these food and beverage majors, revival of Nestle and imminent entry of Reliance, Amul appears to be sitting pretty with its plans to launch a few more milk beverage products in the coming months. Obviously, competition will find it difficult to match the network and brand equity of Amul in this business.

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