Now a startup in the Rs 3.6 lakh crore dairy industry – Neo Milk Products
One brand from India that we are all proud of is dairy brand – Amul. What started as an effort to empower milkmen in Gujarat is today a case study across many B-schools for the way the business and its various sub brands have been built. The dairy business as players in the space will tell you is a tough one, nevertheless also a very lucrative one. The Indian dairy sector is estimated to be worth Rs 3.6 lakh crore, according to the Department of Animal Husbandry, Dairy & Fisheries, Ministry of Agriculture, Govt of India. And major names in the space include Amul, Mother Dairy, Nestle, Gowardhan, Britannia, alongwith the many local state cooperatives. Not to mention the various neighbourhood dairies that consumers rely on.
It is therefore very heartening to see a new venture come up in this tough industry that is not just capital intensive, but brings alongwith a plethora of challenges for the company to deal with. However it is the healthy growth rate of 15-20% that this space is seeing, which makes its lucrative. Neo Milk Products, a Manesar, Gurgoan based venture is a five-year old dairy company which was in the business of making sweet condensed milk for industrial use and bulk Dahi for HoReCa(hotel, restaurant & catering business) sector, it also had facilities to process milk that could be used to make other products as well. However when they decided to focus attention on the B2C side of the business, they started operations of value-added dairy products in March 2013.In May 2012, Neo came under the umbrella of Mumbai based PE firm – Ambit Pragma and now the unit is 100% owned by them. As a B2B player, Neo only had to establish relations with suppliers for their products, but now as they become a consumer facing company, the venture realizes the importance to have a good quality product and the importance of creating a brand. The first product Neo has launched for the consumer market is Neo Home Taste Dahi – a product that promises to taste like the curd one makes at home.
Neo is trying to enter the competitive Rs 750-crore yogurt market which has seen many innovative products and brands enter the space over the last decade. Dinkar Suri, president & director, Neo Milk Products Pvt. Ltd says: “I was conscious that I wanted to bring to consumers something unique and hence our concept ‘dahi that tastes just like home made dahi.’ The point is that while we are in the dairy industry we are not into selling just liquid milk, our aim and vision is to be a leading player in the value added segment.” Dinkar thinks their tagline of ‘Ghar Jaisa Dahi’ for the yogurt will be a differentiator in the market.
The startup today has a team of more than 80-plus people who have been drawn from across industries like manufacturing personnel are technical experts from the dairy industry, the sales team comes from dairy/FMCG background and other functions like finance, HR and marketing were equally well researched before hiring. Dinkar admits it was a bit challenging to get the right kind of people onboard, but they could be eventually convinced about the assignment and the future of the company.
Neo has taken the traditional route to market Neo Dahi and Dinkar says, they have started advertising in the mainline dailies and radio and have plans to move to the digital space soon. Apart from this they are also doing extensive sampling programmes at all malls and modern trade outlets. “Over the next 6 weeks we are going to get good visibility for Neo at various points – at home, while travelling at point of sale, etc,” says Dinkar. Havas Media is handling the media duties for the brand, while Oxygen Communications has been mandated with the creative responsibilities.
Last year the company did a turnover of Rs 45 crores, mostly from its B2B business, and Dinkar is bullish about the potential of the B2C segment. Today the brand is being distributed by 55 distributors across all the major retail chains in Delhi/NCR region, which includes Big Bazaar, Reliance, More and Godrej Nature’s Basket to name a few.
Most players in the dairy business would agree to the supply chain and cold storage complexities involved in making the business successful. But Dinkar says they view every problem in this area as an opportunity. The company is concentrating on building the right foundation in the Delhi NCR part of the country. “As a first mover advantage we are confident that in 12 months’ time they will be able to demonstrate our strategy works in the market place,” says Dinkar confidently.
Most of the challenges for Neo has been related to procurement of the correct quality of milk and to ensure the training of the persons in the manufacturing unit is appropriately done to guarantee the best quality in the finished product. Another challenge, says Dinkar was on the consumer acceptance of the product, which he says they have fortunately overcome.
