Reliance Retail kicks off dairy foray with sip of liquid milk

RELIANCE Industries’ (RIL’s) ambitious dairy plans are finally taking wing. The company, which has been working on plans to enter the country’s Rs 40,000-crore branded dairy sector over the past two years, has kicked off the venture by foraying into the lucrative, but low-margin, liquid milk category. Reliance Retail has begun testing liquid milk, branded Dairy Pure, in Hyderabad, sources told ET. It has tied up with a south-based private dairy operator. The liquid milk has been rolled out in four variants at a pricing structure that pits RIL’s brand against other competing liquid milk brands in the state such as Mother Dairy, Vijaya and a host of other private players. However, Gujarat Milk Marketing Cooperative Federation (GCMMF)’s Amul, which leads the country’s Rs 15,000-crore branded packaged milk market, does not have a presence in Andhra Pradesh. In fact, Amul liquid milk is not yet present in the southern states. When contacted by ET, an RIL spokesperson declined to comment. Hyderabad is a reasonably big liquid milk market with a total estimated size of approximately 11-12 lakh litres per day (lpd), of which packaged milk accounts for 8-9 lakh lpd.

Sources said retailing of liquid milk is expected to commence later this month at Reliance Retail stores across all states. RIL has signed up with the Punjab government for milk procurement. It plans to buy 7 lakh litres every day from 1.5 lakh farmers across 3,000 villages in the state. Other plans include supporting milk cooperatives in Uttar Pradesh and Bihar, but no agreement with cooperatives has been finalised so far. In UP and Bihar, Reliance Retail proposes to set up over 5,000 collection centres, which will be a single-window selling system for the milkmen in the area. RIL is also working on a private label to make deeper inroads in the dairy sector. The country’s biggest market for liquid milk is Delhi, estimated at 50 lakh litres per day, of which pouches account for 35 lakh lpd. National Dairy Development Board (NDDB)’s Mother Dairy leads the Delhi market. Unlike other FMCG products, margins in liquid milk are very low — at just 3-5%. The biggest challenge for players operating in this sector is to work out efficiencies in logistics. However, the dairy sector has a huge potential, with the country’s milk production estimated to have touched 100 million tonne last year. India also happens to be the world’s largest producer of milk. WHITE FLOOD RIL has signed up with Punjab government for milk procurement. It plans to buy 7 lakh litres every day from 1.5 lakh farmers The company also plans to support milk cooperatives in UP and Bihar, but no agreement with cooperatives has been finalised so far Reliance Retail has planned 5,000 collection centres in UP & Bihar. It is working on a private label to make deeper inroads in dairy sector