With over three decades of legacy in the Indian dairy sector, Heritage Foods continues to be a beacon of innovation, trust, and sustainable growth.
Under the dynamic leadership of Srideep Kesavan, CEO, the company has not only maintained its legacy but also embraced cutting-edge technology, farmer-centric practices, and a consumer-first approach to redefine dairy consumption in India. In this exclusive interview with Abhitash Singh, Kesavan shares the latest milestones, innovations in product development, digital transformation, and sustainable strategies that are powering the company’s next phase of growth from strengthening its farmer ecosystem to expanding the footprint of value-added dairy products across the country. Excerpts:
Heritage Foods has been a pioneer in the dairy industry for over three decades. Could you share some recent developments or milestones the company has achieved?
We are among the fastest-growing dairy players, with a 4-year CAGR upwards of 14%, focusing on expanding the organised dairy sector, particularly, in value-added products (VAP). While organised channels account for 55-60% of milk consumption, VAP remains largely unorganised with 80% or more of curd and ghee and over 95% of paneer consumption in the unorganised segment. This presents a significant growth opportunity. The company is well-positioned to lead this transformation with a consumer-centric approach, anchored on six product clusters and an omnichannel strategy. Our commitment to quality and innovation drives our expanding market presence.
Recognised as a great place to work, we are also proud recipients of several prestigious marketing awards, including E4M best use of integrated marketing and omni-channel marketing for our campaign that built paneer consumption as part of daily meal routine in South of India, as well as several awards and honours from our key customers like Reliance, Swiggy, Blinkit, etc. for our customer acquisition and retention rate. With a focus on excellence, we are set to power the next phase of growth in India’s dynamic dairy sector.
The demand for value-added dairy products is growing among consumers so how are you innovating your product portfolio to meet these changing preferences?
We follow a distinctive, consumer-oriented 6 product-cluster strategy, focused on understanding consumption occasions and consumer needs. Despite the vast potential of India’s dairy market, the per capita consumption of organised dairy products remains relatively low at around 400g per head. To drive growth, we leverage data-driven insights to create products that resonate with consumers. A notable example emerged when we cross-tabbed two datasets, revealing that consumers widely prefer buttermilk as a food-pairing beverage with Indian cuisine. Praised for enhancing taste, stimulating appetite, and aiding digestion, buttermilk holds strong appeal. With gut health being a top food-related concern among Indian consumers, we foresee a resurgence in buttermilk consumption. This belief further strengthens our commitment to offering products that cater to evolving consumer preferences and promote well-being.
The key pillars of your company are sustainability and farm-to-table freshness. Can you elaborate on your initiatives to ensure a sustainable dairy supply chain?
We are dedicated to fostering economic sustainability and climate resilience as integral parts of our operations. Our vision is built on two pillars that is delight every household with fresh and healthy products and empower our farmers. By offering fair pricing, technical training, veterinary care, and financial support, we work to uplift farmers, ensuring their long-term prosperity. A robust farmer ecosystem is essential for a resilient dairy industry, and our initiatives reflect this commitment. Recognising the synergy between sustainability and business growth, we actively pursue eco-friendly practices that deliver both environmental and economic benefits. Our sharp focus on reducing environmental footprint leveraging technology and analytics result in continuous optimisation of our fleet improving efficiency, maximising milk procurement and product delivery per kilometre while reducing fuel consumption and emissions.
From the Distributor Management System to the Customer Live Application which allows distributors to place orders and track accounts — to our HRIS system for streamlined human resource management, every aspect of our business is deeply integrated with technology. By harnessing AI and advanced analytics, we continuously optimise operations and capitalise on emerging opportunities. For instance, our use of big data analytics overlays geo-spatial distribution data with historical insights from the Customer Live Application, enabling us to predict and identify areas where sales opportunities are gained or lost. At any given time, our dedicated IT and digital transformation teams are driving over a dozen such initiatives, ensuring our company remains agile, efficient, and ahead of the curve in the ever-evolving dairy industry.
What are some of the biggest challenges facing the Indian dairy industry today, and how is your company navigating these hurdles?
India is the world’s largest milk producer, with an annual output of 240 million MT. However, around 45% is consumed directly by producer families, and of the remaining 55% that enters the market, over half is controlled by the unorganised sector. This segment, plagued by adulteration and price manipulation, poses significant risks to consumer health and market fairness. The company is committed to expanding the organised dairy sector by providing safe, high-quality, and nutritious products. Despite the industry’s size, organised dairy penetration remains low, offering vast growth opportunities. Our marketing efforts focus on raising awareness about dairy’s nutritional benefits, encouraging consumers to shift from processed foods to healthier options. Through educational campaigns, we also address the dangers of adulteration, promoting the importance of choosing trusted brands. Maintaining stringent quality standards across our supply chain, we ensure every product meets the highest safety and nutritional benchmarks. As we grow the organised dairy market, our mission remains clear to empower consumers, promote healthier choices, and contribute to a safer, more transparent dairy ecosystem.
You have a strong presence in both urban and rural markets. How do you tailor your distribution strategies to cater to such diverse consumer segments?
Our robust omni-channel strategy ensures our products are accessible through multiple touchpoints. While we continue to rely on traditional distribution channels like milk agents and booths, we’ve expanded our presence through company-owned and franchisee-operated Heritage Happiness Points, offering consumers a convenient source of fresh dairy products. To enhance the availability of our Value-Added Products (VAP), we partner with over 400 “ambient and long-shelf-life” distributors who supply our products to numerous grocery stores and traditional retail outlets. We also maintain strong partnerships with all major Modern Retail chains, ensuring a prominent presence in organised retail. Understanding the growing preference for convenience, we’ve established strategic alliances with leading Quick Commerce and E-Commerce platforms, providing consumers with easy access to our products through doorstep delivery. This seamless integration of traditional, modern, and digital channels guarantees consumers can enjoy our products anytime, anywhere, enhancing both accessibility and satisfaction.
Let us know more about your expansion plans, product launches or strategic partnerships we can look forward to?
The company is actively pursuing expansion through strategic initiatives focused on enhancing production capacities and diversifying its product portfolio. In the first 9 months of this fiscal year, we reported a 9% increase in revenue over same period last year, despite the industry-wide consumption slowdown that we witnessed in Q2 and Q3. We also recorded a significant jump of 111% rise in PBT, indicating robust financial health and operational efficiency. We are strategically expanding its presence beyond South India, where it currently generates ~ 90% of its revenue, into emerging markets like Maharashtra and NCR.
The company is prioritising investments in value-added dairy products, including curd, paneer, buttermilk, flavoured milk, cheese, etc. which now represent 33% of its business. Recent investments include a ?204 crore ice cream manufacturing facility in Hyderabad and a ?45 crore flavoured milk line in a facility near Tirupati. With strong demand for health-focused dairy products, our company aims to sustain growth and diversify its geographic footprint over the next few years.
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