Emerging trends shaping the future of dairy industry in India

The Indian dairy industry has been hit hard due to the pandemic. Businesses needed to navigate the adverse consequences of the pandemic with the constant change in demand, impact on supply, and logistics.

There was a visible shift from procurement centres to retail outlets, which in turn overwhelmed the distribution logistics.

However, the Indian dairy industry emerged intact by making adjustments like operational flexibility in the business model and supply chain simplification.

The pandemic-induced lockdown indicated a clear shift in milk collection from informal to formal channels as farmers were delivering milk at the collection centers organised by cooperatives and private organisations.

Change in consumption and eating habits

Post pandemic, many companies adopted the hybrid work model allowing employees to work from home. This working model leads to consumers shifting their eating habits, changes in consumer behaviours, and increased demand for ready-to-drink or ready-to-eat products.

From the perspective of the dairy industry, the need for the dairy beverage category spiked with the consumption of flavoured milk and other such diversified products. Due to the increase in household consumption, retail demand for various cheese variants experienced favourable growth.

Entrepreneurs and established brands are introducing products focussed on these categories by observing the shifting trends and consumer behaviour. 

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Focus on quality, safety, and hygiene

Health and wellness have become the primary focus for consumers. Nowadays, consumers are increasingly concerned about the hygiene, quality, and safety of food products, especially dairy products.

Within India's organised dairy market, this will spike the growth of the value-added dairy segment. There is a growing chance that consumers will likely prefer packaged over loose products. In the organised players, categories like curd, milk, and sweets have experienced this trend.

Companies have created awareness about their product, highlighting the immunity and nutrition factors during the pandemic. Consumers prefer products that deliver quality along with these elements. As a result, demand for products that have nutritionally high values like probiotics is expected to grow.

Increasing health-conscious consumers are moving towards milk and related products to supplement food with the nutrition required for the body. The last decade has witnessed a clear shift of the market from carbonated drinks to milk products. 

Emerging trends in the dairy industry

1. Functional food

Functional food is in demand due to consumer awareness about the relationship between food and their well-being. Food plays a crucial part in lifestyle changes, and milk is considered a complete food in India. The essential feature of success in functional food is the consumer's perception and belief.

The concept of functional food gained momentum in India during the pandemic. Companies engaged with consumers by increasing awareness about specific ingredients and compounds in the food that will help prevent disease or possess curative properties.

There are numerous effects related to the consumption of functional foods demonstrated and suggested by epidemiological studies or clinical trials — developments such as reducing blood pressure, enhancing immune function and improving heart health. Nutritionists recommend adding milk as it's an essential part of the diet while suffering from chronic disease. 

2. Healthy eating

Sustainability and health are some of the biggest factors for shifting consumer behaviour in the recent times. Healthy eating has significantly evolved the need of consumers for healthy yet instant snacking options.

With consumers spending more time at home while urging to adopt the healthy route, the traditionally known "Haldi Doodh" started trending again as "Golden Latte."

Consumers’ desire for convenient yet healthy snacking had led companies to innovate with their offering. Moving beyond the traditional yogurt cup, India also observed newer trends like drinkable yogurt.

As consumers become more aware of the healthy snacking segment, it gives them enormous potential for emerging dairy-based snacks with unique offerings.   

3. Veganism

Consumers' rising interest in veganism has created opportunities for various plant-based beverages from sources like soya, almond, and coconut to name a few. These present themselves as an alternative to dairy products while claiming the goodness of dairy with distinct health benefits.

The ensuing marketing communication and consumer adoption will decide if these alternate products grow beyond a fad and become a category in itself.

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4. Ecommerce

Ecommerce has also created opportunities for the dairy industry to connect with consumers directly. With most consumers still working remotely, there has been a massive shift in shopping and the adoption of digital commerce by consumers in India.

Hence, ecommerce has become a priority channel and platform for the dairy industry to connect with consumers. Digital commerce will play a significant role soon as online shopping continues to accelerate.  

5. Innovative packaging

This is yet another emerging trend that helps consumers with value-added convenience. Consumers are engaging more with companies innovating with packaging as it is equally important as the contents inside. Consumers' demand for functional, sustainable, and visually appealing designs increases and is expected to grow further.

One of the essential criteria for the dairy industry is eco-friendly and convenient packaging as consumers look for product packaging that is convenient to use.

From modified atmosphere packaging that will help extend the shelf life of the dairy products to active and controlled packaging that helps maintain freshness or packaging embedded with QR code that will continue to build interaction, customer experience management is expected to play a crucial role in the dairy packaging industry.  

6. Education and skilling

Looking at how the dairy industry will flourish, there also is a need for attention towards the education and honing of skills in the times to come. Those who wish to enter the industry should be provided with important dairy processing and technological skills, which can further propel the apprenticeship schemes in India.

Private organisations, institutions, and the government can join hands and foster a positive environment for the dairy industry as a successful career prospect.

It is very important to present dairy sector as a place to make long and distinguished career to young students. At the same time, the sector will have to create opportunities to attract good talent within the existing workforce.

Emerging opportunities in the Indian dairy industry

New-age technologies such as the Internet of Things (IoT), advanced analytics, and Artificial Intelligence (AI) has helped to reduce milk wastage, digitise the operations, improve the production of milk, develop last-mile logistics infrastructure, monitor the health of livestock, find anomalies in milk production and predict weather conditions. 

The role of technology in the dairy industry has grown from the village level of testing the composition of milk or automated milk collection to air-lifting of milk, mechanical dairy plant operations, and assessing total milk quality parameters.

Furthermore, technology adoption has witnessed innovative solutions like sensors to detect whether the cow is ready for milking or not, robotic milking machines, blockchain for product traceability, cattle monitoring, and drones.

The pandemic-induced period created opportunities for companies to develop a doorstep delivery app with a milk testing kit for added convenience, setting India on the path to achieve NITI Aayog’s projected overall milk production of 330 million tonnes by 2033.