Current milk production of India at around 193 million MTs makes it the largest milk producer in the World with the second largest player less than half of the size that India is today. Further, milk production in the country is growing by 4.5% CAGR over more than 3 decades now.
With almost negligible imports or exports, India also is the largest milk consumer in the World. Further, milk consumption has kept pace with growth in production at around 4.5%. This has led to dramatic improvement in per capita consumption from less than 200 gms per day 2 decades back to around 400 gms per day.
Obviously, with the sustained growth in milk production and projections that it shall further double over next 20 years, people are questioning the sustainability of this growth and whether enough consumption shall continue to happen within the country to justify this growth in production. We are pretty sure, milk consumption shall continue to grow aligned with growth in production because of following:
Population increase (sheer size of Indian population at 1.3 billion today), increased urbanisation, awareness and affordability shall sustain the increase in milk consumption quite comfortably. Even after that, we Indians would be consuming lesser milk as compared to people in Europe or US.
Further, large part of Indians being vegetarian, milk becomes automatic first choice for source of protein as they ascend the affluence curve as seen in countries around the World.
With per capita protein consumption in the country almost half of other developed countries; we still have a long way to go.
(In fact, India also has the largest latent protein market and would be growing at astonishing pace over next 20-25 years. Shall discuss that in separate post!)
Further, there's huge space for organised players to make their mark, considering highly fragmented and largely unorganised market for milk in the country:
Even after 70 years of independence and pioneering work done by stalwarts in the country, hardly 30% of the milk market in India is organised today. Albeit, there's very rapid transition happening from unorganised to organised with changing consumer awareness & preferences.
Further, with the opening up of sector since 1991, organised private players have started making their mark and now there are sizeable no. of large players filling the space. Also we have seen entry of large multinationals as well as FMCG players taking a plunge into the dairy segment in last few years.
Therefore, while the Indian dairy market is destined to reach Rs. 50 Lakh crores market size in next 20 years, it remains to be seen how the landscape changes with respect to different players! Happy hunting!
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