Submitted by:

Samarth Dargan
(Roll No 52)

Entry Strategy for

foreign player in
India Yogurt
Market

Table of Contents
I.

Executive Summary...........................2

II.

Introduction......................................2

III.

Review of Literature.........................3

IV.

The Methodology..............................4

V.

Discussion and Findings...................5

VI.

Conclusion and Summary.................8

Executive Summary

Yogurt, traditionally known as Dahi in India, has been a part of the

Indian meal, with home-made dahi consumed daily. But now people
become aware about the difference between traditional dahi and
yogurt.

India dairy industry's rapid growth is attributed primarily to the

advent of functional products with characteristics such as low-sugar,
low-fat, cholesterol-reducing and favourable impact on digestive
health.

Among all functional foods, yoghurt is considered an ideal medium for

delivery of beneficial functional ingredients.

In addition, demand for organic yogurt products with natural

ingredients is also on the rise. Innovative and premium products such
as bio yogurts or yogurts enriched with juice and fruits are also
finding favor among consumers.

India Packaged Yogurt Market is growing with a CAGR of 17% from

last three years and is projected to get double by the year 2018 due to
rising awareness about product, increasing disposable income,
growing demand in middle class people and affordable price of
yogurt.

India yogurt market is divided into two segments viz. Spoonful and
Drinkable range. Spoonful segment dominates the market heavily
while drinkable yogurt is growing fast. Keeping in point, the health
and nutritional benefits of yogurt, the youngsters, women, athletes,
etc. majorly fuelled the sales in yogurt market.

ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

Introduction
Indian Dairy Industry
On BIG Growth Path
Operation Flood, initiated by Dr V Kurien, brought about a major
transformation in Indias dairy industry, propelling India to become worlds
No. 1 milk producer. From 1/10th of the world production fifteen years go,
Indias production now accounts for 1/ 6th of total global milk output. Milk
production in India is growing at 4 per cent per annum, whereas in the rest
of the world it grows at 2.1 per cent. The current production in India is 116
million tonnes. But there are many shortcomings that need to be corrected
to take the industry further forward. A major shortcoming is the low
average per animal productivity. While the milk output growth is high, the
demand is increasing at even a higher pace. Clearly, there is no room for
complacency. Much needs to be done to boost both production and
productivity. This underscores the importance of time-tested techniques like
progeny testing and artificial insemination. The countrys 12th Plan would
aim at taking the current milk output from 115-116 million tonnes to 150
million tonnes or so by 2017. The plan strategy lays much emphasis on
productivity increase, one of the surest ways of keeping costs down.
Milk Prices
Cost is important since higher milk prices are a cause for concern for the
government trying to address inflation worries. Compared to countries like
U S, milk production in India is costly because land is expensive and
interest rates are higher. But India enjoys the advantage of having cheaper
labour. Labour is also easily available. But the cost of cattle feed is high due
to exports and this has also contributed to high cost of milk. . The challenge
is how to enhance milk output with limited resources and meet the growing
demand, particularly in the cities, while at the same time keeping rising
milk prices in check.
Milk Production Outlook
ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

Indias White Revolution has attracted world-wide attention and Indian

performance is expected to continue to play a major role in the future of the
dairy industry in the world in coming years. It is expected that the world
milk production will rise to 867 MMT by 26 per cent from current 714 MMT.
However, as per the current CAGR of 4 per cent and optimistic projection of
4.5 per cent, India`s milk production is estimated to touch 180 million MT
by 2020. This will lead to increase of India`s share in the world milk
production from the current 16 per cent to 21 per cent in 2020. The core of
the dairy industry lies with the milk producing farmer, who gets affected by
many factors ranging from fuel and agricultural input prices to
government`s foreign policy. Hence, the state of milk producing farmer is
crucial for the dairy industry. To sustain the milk production there has to be
a right mix of social, environmental and economic factors influencing the
farmer.

National Policy
Against this backdrop, the national policy on dairy is critical for the growth
of dairy industry. Milk production in US has been growing at a very good
pace as a result of policies of the US government which nurture and protect
cooperative marketing by dairy farmers. Experts feel India should also
continue its emphasis on dairy development through cooperatives and
private investments to ensure long term growth and sustainability of the
ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

industry. India has the largest bovine population in the world with a large
processing capacity of 98.3 million litres per day. Figures show, milk
producers in India enjoy highest percentage share of consumers` rupee -70 to 86 per cent. This is more than double that in other countries like US,
European countries and New Zealand where the returns to milk producers
is less than 40 per cent of the consumers spending on milk.
Challenges
However, there are challenges to dairy in India, mostly in the form of rapid
urbanization, low interest of younger generation in dairy farming and
increasing real estate price that leads to loss of farm lands. Due to these
factors, some dairy regions may come under pressure. The preventive
measures would be to implement changes in the dairy production to make
farming system more competitive. In addition, there is a need to develop
infrastructure to enhance production, followed by investment at farm level
and improving feeding methods. More importantly, Government could
consider giving relaxation in tax on farmer`s income from milk to encourage
him to invest in dairy.

Rising consumption
India is not only the largest producer of milk but also the largest consumer
of milk. The policy approach should be to create growth path for the dairy
industry. Currently, milk constitutes 15 per cent of the average households
expenditure on food. However, with increasing urbanization and growing
GDP, income rises are leading to fall in share of food as percentage of total
expenditure.
The Cooperatives
A big success story in Indias dairy development is of dairy cooperatives. In
the forefront is Gujarat Cooperative Milk Marketing Federation (CCMMF),
the apex body of farmers` milk cooperatives. It markets the milk products
produced by its member cooperatives under the brand name Amul and
Sagar. Milk is sourced from 15,301 village dairy cooperatives where more
than three million farmers collect their milk produce. Amul apart from being
ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

Asia`s largest milk brand is a vehicle for economic and social development
through which farmers manage their own resources. Amul has long been
dedicated to providing best prices to its member producers for their milk
and at the same time providing value for money to its consumers. Amul is
also developing wide range of products to meet future demand, including
calcium fortified milk, flavored yoghurt, frozen yoghurt, sugar free icecream and pro-biotic products. In order to keep pace with the growing
market and production base, GCMMF has planned a total investment of
$600 million for milk processing and village level infrastructure
enhancement in the next five years.
Sustained Growth
Undoubtedly, dairying has provided gainful employment to millions,
primarily women, in the villages. Investments under Operation Flood have
resulted in sustained growth and self-sufficiency in dairy: Amul Model has
demonstrated the capacity of a single commodity to have multi dimensional
effect on producers, consumers as well as the economy of the country. This
model has also delineated the importance of commercial approach to
development and nil interference of government in commercial enterprise.
By the year 2020, India`s GDP is targeted to cross that of UK and will be
ready for a steep rise till 2050. But it can be realized only by active
government support to vital sectors like dairying and implementation of
well formulated ideas provided by dairy scientists and experts

Attractiveness of Indian Market

ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

Organized market is growing at nearly 10% in value terms annually,

with value added products gaining the popularity among the
consumers

The operating margins in value-added products are almost 2x liquid

milk business

The increase of popularity of healthy food

There is an incremental change in premium milk consumption

segment

An increase of readiness to experiment with the new foods

Indian Yogurt Market

With the advent of functional products, and the emphasis on low calorie,
low sugar, digestive products, the global dairy industry is undergoing a
paradigm shift. Instead of the traditional milk, cheese, and butter concepts,
more functional products such as yogurt, probiotics, etc. are now being
accepted as the medium of delivery for beneficial functional ingredients. As
per the GIA, the European and Asia-Pacific markets, which account for a
more than 80% share of volume consumption, dominate the global yogurt
market. Within the Asia-Pacific region, China is the fastest growing regional
market for yogurt in terms of consumption (value and volume). As per
Euromonitor estimates, emerging markets, including China and India, will
contribute 95% of the global dairy markets growth between 2011 and
2016. Yogurt, traditionally known as Dahi in India, has been a part of the
Indian meal, with home-made dahi consumed daily. The Indian palate is
well-accustomed to the taste of not only plain yogurt but also such form and
taste variants as Lassi, Chaas, Srikhand, Mishti Doi, Raita, etc.
In spite of being ingrained as the staple consumable, yogurt consumption in
India lags far behind the average consumption in most developed markets.
When compared to such high consumption markets as France (which sees
an annual consumption of25 kg), Germany (24 kg), and Holland (23 kg), the
per capita consumption in India is a meager 2.3 kg per year. Again, the per
capita consumption of the packaged, store-purchased variety is 300 grams,
and this too is heavily skewed toward urban India (~1 kg), and is near-zero
in rural India
ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

Market Evolution

The Indian yogurt market is valued at an estimated INR 1000 crore, or

~USD 182 million, comprising organized, packaged yogurt and its varieties,
packaged drinks, etc., and also the frozen yogurt service market. This is
expected to grow at a CAGR of 20-25% with the expectation that it will
double itself in the next three years.

Market Segments: Yogurt Market

In terms of segments, apart from the classical organized vs. unorganized,

and product vs. service segmentation, the yogurt market can also be
classified as the Drinkable range and the Spoonful range. Drinkable yogurt
is emerging as a competition for flavored milk drinks and fruit/vegetable
juice, while fruited yogurt is competing against the high calorie ice-cream.
In terms of product share, plain/ natural yogurt constitutes the largest
share and dominates retail sales, while such smaller categories as drinkable
yogurt, and flavored and fruited yogurt, are likely to challenge specific
packaged food and soft drink segments.
The packaged yogurt brands in action comprise two broad segments:
national level players like Amul, Mother Dairy, Nestl, and Britannia, which
constitute about 80% of the total packaged yogurt market thanks to their
ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

distribution networks and product penetration, with the remaining 20%

made up by such strong regional players as Karnataka Cooperative Milk
Producers Federation, Parag Milk & Milk Products, Himalaya International,
Tirumala Milk Products, The Nilgiri Dairy Farm, and VRS Foods, along with
new international entrants in the markets e.g. Danone, Fonterra, etc. The
space is expected to become more competitive with other major business
houses such as Reliance, ITC, and CavinKare planning to enter the dairy
space. The product offerings in the packaged segment range from plain
yogurt to a plethora of varieties including probiotic, vitaminfortified, stirred,
creamy, and pulp-laced, and span both the most basic of flavors like vanilla,
mango, pineapple, and strawberry and also more exotic fruits such as
raspberry and plum. In terms of pricing, INR 18-20 is the usual price point
for a 100 ml cup

The other existing but quickly emerging segment includes retail service
brands like Cocoberry, Red Mango, Kiwi Kiss, and Yogurberry, which sell
flavored/frozen yogurt through their exclusive/ standalone outlets stocking
their respective brands and signature flavors. The retail service outlets are
using modern trade institutions like colleges, schools, office canteens,
airports, fivestar hotels, and independent kiosks, apart from traditional
spaces such as malls, high streets, and popular markets, for tapping their
target consumer group.
ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

One visible trend in the market is the rapid overlap of product offerings in
both these segments with more varieties of flavored yogurt being offered by
dairy brands to tap into the frozen yogurt market. Domestic players like
Amul, on the one hand, offer frozen yogurt brands (Amul Flaavyo, in this
instance) along with other offerings in the packaged fruited yogurt category.
Nestl also offers a range of fruited yogurts (branded as Nestle Real Fruit
yogurt, in mango and strawberry flavors), while Mother Dairys fruited
yogurts offer such flavors as blueberry, raspberry, and plum. At the same
time, both new entrants and existing brands are enhancing their outlet
reach to maximize the availability of their products. The surge in consumer
demand is one of the prime drivers of the yogurt markets growth. The
rising awareness about lifestyle related health concerns such as diabetes
and obesity, and the benefits of yogurt, with its positioning as a healthpromoting product that improves metabolism, has a positive impact on
digestive mechanism, and enhances the immune system, ensures a repeat
purchase. This awareness is complemented by the consumers willingness
to try the new and innovative product offerings available, as a result of their
wider international exposure. As a result, the conventional spoonful of plain
yogurt is increasingly substituted by drinkable yogurt, organic yogurt, bio
yogurt, or fruited / flavored yogurts. The consumers experimentation is
supported by the changing nature of family earnings, especially the
emergence of dual income households with higher disposable incomes, in
terms of spending on products that were not considered imperative for daily
consumption or used to be generally home-made. The other macro factors
that are supporting growth include the wide availability of raw material that
ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

10

ensures an easy entry, and easy exit, from the market. The existing
distribution network of established players and channel partners can be
utilized to reach the final consumer, and the increasing reach of organized
retail formats, in showcasing their extensive product range to a larger
target audience, along with attractive packaging and competitive
promotions, helps in enticing consumers to both for trials and in making
repeat purchases. With the broad consumer acceptance of packaged yogurt
and frozen yogurt products which satisfy their lifestyle and convenience
needs, the market is expected to grow, encouraging more regional, national,
and international players to enter the market. The existing players are
making efforts to widen the consumer base, by, for instance, introducing
pack sizes and variants at lower price points to target rural consumers.

Review of Literature
Out of many research done by different Marketing research firms one is
from Technopak done in February 2014 showing the domestic yogurt
industry, market evolution, market segments, relevant Industrial polices
and related laws.
Another Research done by Dairy Tech India showing growth path of dairy
industry, Milk Prices, Milk Production Outlook, National Policy, Challenges,
Competition, Rising Consumption, Sustained Growth.

ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

11

The Methodology
Research Background and Objective

Research Design

ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

12

Exploration Phase

Piloting Phase
ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

13

This phase will be conducted primarily to scan the yogurt market & check
existing market dynamics - presence of yogurt brands in market, key
sources of purchase, identifying key Target Segment, channel dynamics
and identification of further contact points for interviews
Conduct researcher driven in-depth interviews with Consumers & few
competitors
These will be conducted with the help of discussion guides. It will be an
exploratory open end discussion of approximately 30-35 minutes.
Below listed info areas will be collected from selected target group
From competitors market size and forecast related questions will be
asked, sales value and volume of brake lining & forecast , Market share of
competition
From Consumers Key Drivers for yogurt? Form of Purchase? Purchase
Frequency? Brand awareness & most purchased brands? Why? Parameters
considered while purchasing ? Purchase process? Source of purchase?
From channel partners/Retailers Locating key cities? Main driver for
consumer? Pricing Analysis, price margins at different levels,?

Main Phase
With

the help of information collected from pilot phase,

Sample split of Consumers, Competitors, Channel Partners will be finalized
Structured questionnaires will be designed
All this will be done in conjunction with the company

In this phase we will conduct two type of interviews

In depth interviews will be conducted with competition companies and raw material
suppliers and few consumers.
o We will use the understanding gained from the pilot phase in moderating the

discussion to ensure sharing quality information and free flow of information

from the respondents
In this phase structured questionnaires will be used to conduct interviews with
consumers, channel partners and respondents from Competitor company.
o These interviews will be conducted by corporate interviewers

ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

14

Discussion and Findings

Mode of Entry

ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

15

Conclusion and Summary

ENTRY STRATEGY FOR FOREIGN PLAYER IN INDIA YOGURT MARKET - ]

16