Fonterra eyeing USD $1bn from Indian market

This comes after the company decided to further enhance its cooperation with Indian partner, Future Group by focusing on meeting flavoured milk, yoghurt, cheese demand.

The company said that the major reason for entering the value added segment is because it is expected to grow 50% faster than the dairy sector. The milk intake is also expected to rise 42% from 196 billion litres to 278 billion litres over the next 7 years.

Fonterra’s Indian joint venture executive Sunil Sethi said that the company only needs to capture a market share of 4% to 5% of that country’s dairy market to meet the revenue target of USD $1 billion in the next 7 – 10 years.

Fonterra has been present in India since 2001, but it partnered with Future Group in June 2019 and launched its own milk brand, Dreamy in the same month.

The company is also focusing on high-end restaurants under the Anchor Food Professionals brand.

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Indian consumers

While launching toned milk, milkshakes and curd in June 2019, Future Group founder Kishore Biyani said, ”Fonterra has deep expertise in product development and we are working in close partnership to bring in our understanding of Indian consumer tastes, preferences and habits. The product range will reflect the aspirations of consumers and we are hopeful that the brand will win their trust and confidence.”

According to scholar of Punjab Agricultural University Ankita Kataria, the India dairy sector has a huge potential as only 25% of the milk produced by more than 70 million rural households in the country is sold in the organised market, valued at US$ 14 billion. The milk production of India is 176.3 million metric tonnes and is the highest in the world. There is high availability of cheap labour and technological infrastructure.

She added that the milk industry in India is dominated by liquid milk and only a handful of other products like cheese, yogurt, skimmed milk powder and ice cream are produced in India.

This the segment Fonterra India JV is targeting. The company is looking to capture USD $3.5 billion market of value added segment.

The Indian market is a perfect blend of all age groups with the highest youth population which is ready to experiment with novel products with good nutritional properties, she added.

French cheese maker Fromageries Bel, Mexico’s Grupo Lala, Dutch dairy cooperative FrieslandCampina, Germany’s Hochland Group and Denmark’s Arla have also targeted the Indian market for opportunities to set up own units or to partner with local players. Global dairy players like Schreiber (US) with Dynamix Dairy (Maharashtra), Nestle and Danone among others have made significant investments in India.