The Indian dairy sector, the largest in the world, is experiencing a surge in demand, driven by increasing health awareness and a growing preference for protein-rich diets, according to Akshali Shah, Executive Director of Parag Milk.
Despite the FMCG sector’s struggles with sluggish consumption growth, India’s dairy market has shown remarkable resilience, according to Akshali Shah, Executive Director of Parag Milk. In a conversation with ET Digital, Shah highlighted the dairy sector’s ability to cater to diverse consumer needs-from everyday essentials to premium and health-focused products, as a key factor in its success.
Shah emphasised that the dairy sector’s adaptability has enabled it to thrive in an otherwise challenging consumption environment. However, she also noted that fluctuations in raw milk prices remain a significant challenge for the industry. Edited excerpts:
The Economic Times (ET): India’s milk production stood at 239.30 million tonnes (MT) in 2023-24, a 3.78% increase from the previous year. However, this growth rate signals a slowdown against previous years, with a 5.77% rise in 2021-22 and a 3.83% increase in 2022-23. How do you explain this?
Akshali Shah (AS) The slowdown in India’s milk production growth from 5.77% in 2021-22 to 3.78% in 2023-24 reflects rising feed costs driven by inflation, supply chain disruptions, and stagnant farm-level productivity. The limited access to modern breeding programs and farming techniques further compounds these challenges. Amid these challenges, the dairy sector’s resilience is notable. Rising health consciousness and the shift toward protein-rich diets drive demand.
Globally, the dairy industry is projected to grow at a 3.8% CAGR between 2024 and 2032, according to the IMARC report. India’s dairy industry has significantly outpaced this, growing at a 10.7% CAGR from 2018 to 2023, with the organised segment expanding at 13.5%. It is expected to maintain a CAGR of 14% from 2024 to 2032, fueled by urbanisation and consumer preferences for value-added products.
ET: The Fast-Moving Consumer Goods (FMCG) sector has faced challenges in recent quarters due to sluggish consumption growth, impacting sales and revenue. How has India’s dairy market performed over the past few quarters?
AS: While the FMCG sector has faced challenges due to muted consumption growth in recent quarters, India’s dairy market has demonstrated notable resilience. Despite inflationary pressures and fluctuating raw milk prices, the dairy industry has continued to grow, driven by the rising demand for health focused, protein-rich diets and value-added products.
Parag Milk Foods has effectively leveraged these trends through diversification and innovation. While traditional products like Gowardhan Ghee and Go Cheese remain staples in Indian households, the company has expanded its portfolio with premium offerings such as Pride of Cows, a single-origin milk brand catering to urban consumers seeking purity and traceability. Additionally, the introduction of lifestyle-oriented products like Avvatar whey protein has addressed the growing demand for functional and health-driven food options.
By addressing diverse consumer needs from everyday essentials to premium and health-centric offerings, India’s dairy sector remains a strong performer in an otherwise subdued consumption environment. These strategies reflect the shift in momentum towards branded and value-added dairy products, even amidst headwinds faced by the FMCG industry.
ET: How is the Indian dairy industry addressing the issue of fluctuating raw milk prices?
AS: Fluctuations in raw milk prices remain one of the biggest challenges for the dairy industry. At Parag Milk Foods, we have taken a multi-pronged approach to mitigate these effects. By leveraging long-term farmer partnerships and adopting fair pricing mechanisms, we ensure stability in procurement costs. Furthermore, modern technological tools like SAP HANA allow us to optimise supply chains, monitor procurement in real time, and reduce wastage, directly tackling price volatility.
We also work closely with the farmer community to implement best practices at the farm level, such as promoting balanced feed formulations and efficient herd management. These initiatives not only improve milk quality, benefiting farmers but also help to maintain relationships which eventually resulted in milk procurement.
AS: What role does technology play in boosting dairy efficiency and scalability?
ET: Technology is revolutionising the Indian dairy industry, and at Parag Milk Foods, it’s integral to our operations. Tools like SAP HANA provide end-to-end visibility across the supply chain, enabling us to manage procurement, production, and distribution more efficiently. Predictive analytics helps us monitor milk yield trends and anticipate market demand, ensuring that production is perfectly aligned with consumer needs.
Moreover, automation in quality control, such as advanced milk testing equipment, ensures that only the best products reach consumers. On a broader scale, innovations like IoT-enabled sensors and AI-driven farm management solutions are helping farmers improve yield and reduce environmental impact, laying the foundation for a more scalable and sustainable dairy ecosystem.
ET: How are milk producers addressing the demand for adulteration-free products?
AS: Consumer demand for adulteration-free dairy products has grown significantly in recent years. At Parag Milk Foods, we have embraced this trend by strengthening our focus on transparency and quality assurance. Our products undergo rigorous testing at every stage of the supply chain, and we work with farmers who adhere to sustainable farming practices to provide good quality products to our esteemed consumers.
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