Moo-ving Up: A Look at India’s Thriving Dairy Industry

India has been among one of the leading producers and consumers of milk. This makes India’s dairy industry a significant component of the economy, supporting millions of livelihood and contributing to Gross Domestic Product (GDP). In the financial year (2022-23), India’s dairy industry produced over 230.58 million metric tonnes of milk.

India’s Dairy Market size was valued at USD 131.5 Billion in 2024 and is expected to reach USD 290.8 Billion by 2033, at a CAGR of 8.01% during the forecast period. With time, this industry has become more organised, and online retail has also become a part of it. Let us look at some listed companies in the dairy industry.

List of Stocks

There are various listed dairy companies as well as large conglomerates with milk and milk products being one of their commodities.

Note: The above information is dated 24/05/2024.

Overview of the Dairy Industry

The dairy industry is majorly dominated by the 5 top players that claim over 40% of the market share.

Leading Companies

• Gujarat Cooperative Milk Marketing Federation Ltd (AMUL)

Founded in 1946 by Tribhuvandas Patel and led by Verghese Kurien, Amul is an Indian cooperative based in Gujarat, part of the Gujarat Cooperative Milk Marketing Federation. It catalysed India’s White Revolution, making it the largest global producer of milk products, and has expanded into international markets.

• Mother Dairy Fruit & Vegetable Pvt. Ltd (Mother Dairy)

Mother Dairy, established in 1974, is a subsidiary of the National Dairy Development Board (NDDB), under India’s Ministry of Fisheries, Animal Husbandry, and Dairying. It manufactures, markets, and sells milk and dairy products as a wholly owned entity of the statutory NDDB.

• The Kerala Cooperative Milk Marketing Federation Ltd (Milma)

Established in 1980, the Kerala Co-operative Milk Marketing Federation (KCMMF), known as Milma, is a profitable state cooperative under Kerala’s Ministry of Cooperation. It comprises three regional unions and took over from the Kerala Livestock and Milk Marketing Board in 1983.

• Mehsana District Cooperative Milk Producers Union Ltd (Dudhsagar Dairy)

Dudhsagar Dairy, part of Gujarat’s Cooperative Milk Marketing Federation, is Asia’s second-largest, processing 1.41 million kilograms of milk daily. With over 5,20,000 members and a network of 500,000 producers, Dudhsagar Dairy made a profit of ₹321 crore for the year 2021-22.

• Karnataka Cooperative Milk Producers Federation Ltd (Nandini)

The Karnataka Milk Federation (KMF), under Karnataka’s Ministry of Cooperation, is India’s second-largest dairy co-op after Amul. Founded in 1974 and rebranded in 1984, KMF sells dairy products like milk and ice cream under the Nandini brand, operating 14 milk unions across the state with 1,500 members.

State Contributions

Following are the various states in descending order of their contribution percentage:

• Rajasthan: Accounting for more than 15% of India’s total milk production, this state leads in the milk production volume. Known for breeds like the Rathi and Tharparkar known for their high milk yield, this state actively promotes animal husbandry practices.

• Uttar Pradesh: Coming in a close second, UP’s contributions amount to 14.93% of India’s milk production. Its success can be attributed to a well-established network of cooperatives and a focus on improving breed quality.

• Madhya Pradesh: This state, ranking third in milk production, accounts for 8.6% of the country’s total milk production. Annually, it produces 17,108 metric tons of milk. Most of the contribution is derived from the Damoh district.

• Gujarat: The home of Amul, India’s iconic dairy cooperative, Gujarat contributes roughly 7.56% to the national milk pool. The state’s success lies in its vast and strong cooperative network and prioritising value-added dairy products.

• Andhra Pradesh: With almost a 7% share in national milk production, Andhra Pradesh is renowned for its cooperative societies and breeds like Ongole, known for their adaptability to harsh climates. The state government actively invests in veterinary services and milk processing facilities.

Some other state contributions include 6.47% from Maharashtra, 6.37% from Punjab and ~5% each from Bihar, Karnataka, and Haryana.

Market Highlights

• India’s dairy market size is estimated to be USD 26.11 billion.
• By 2029, it is estimated to grow up to USD 35.96 billion.
• The projected CAGR (Compound Annual Growth Rate) for the period 2024-2029 is expected to be 6.61%.
• The infrastructure has the capacity to produce 126 million litres of milk per day.
• To support infrastructure development, Central and State Governments have introduced various incentives to encourage investment in this sector such as the Animal Husbandry Infrastructure Development Fund (AHIDF).
• Dairy is one of the largest agricultural commodities of India contributing 5% to the national economy.
• Milk production is growing at a rate of 6% in India, which is 4% higher than the global growth rate.

Pros and Cons of Investing in Dairy Stocks

Pros

• Stable Demand: Milk, being a staple food in India, can ensure consistent revenue for dairy companies in the industry.

• Growth Potential: With the growth of the population, the demand for dairy products is expected to rise. Moreover, the market is estimated to grow up to USD 35.96 billion by 2029.

• Government Support: The Indian government has promoted the dairy sector through subsidies, infrastructure initiatives, and breed improvement programs, creating a more stable business environment for investors.

• Product Diversification: This industry provides flexibility to the companies to extend the product catalogue beyond milk, thereby improving the exposure to the market and increasing the profit margins.

Cons

• Price Volatility: Milk prices may fluctuate due to seasonal production variations and occasional supply chain disruptions, that impact the profitability of the companies.

• Limited Infrastructure: Lack of proper cold chain infrastructure in some regions can lead to spoilage of dairy products, causing a loss.

• High Competition: The Indian dairy sector is competitive with both established cooperatives and private players vying for market share, putting pressure on profit margins. The unorganised sector and smaller players make up almost 60% of the total market share.

• Environmental Impact: Large-scale dairy production can raise concerns about animal welfare and environmental impact. Investors seeking responsible options may prioritise companies with sustainable practices and ethical sourcing.

Conclusion

The Indian dairy industry stands on a strong foundation as a leading milk producer in the global market. It is supported by players like Amul, Mother Dairy and even companies like Britannia and Nestle. While the industry promises high growth potential, careful consideration of pros and cons is needed before investing.

To invest in the industry, you can opt for various avenues such as equity stocks or mutual funds that are sector-based. Angel One enables you to invest in multiple avenues from equity to bonds. To start your investing journey, open a Demat account with Angel One, completely paperless!

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.

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