Indian middle class growth could see rise in packaged milk consumption

By Ankush Chibber

- Last updated on GMT

Related tags Milk

Indian middle class growth could see rise in packaged milk consumption
The rising economic prowess of India is expected to spur a huge change in how people consume milk in India, benefitting organised dairy companies present in the country.

According to the Tetra Pak Dairy Index, an annual information source on the dairy industry, consumers are forecast to switch in huge numbers to packaged white milk from loose milk in the decade to 2020.

According to Tetra Pak research, around 51 per cent of white milk consumed in developing countries, which includes India, Pakistan, Bangladesh, and Sri Lanka, was bought loose and 49 per cent was bought in packages.

By 2014, around 55 per cent of white milk is forecast to be sold in packages, which is then expected to climb further to 70 per cent by the year 2020, the dairy index said.

Loose milk is typically unpasteurized and is carried in large metal cans on bicycles and motorcycles from farms to homes in India. Although in cities like Bangalore, Calcutta, Delhi, Mumbai, Chennai and Hyderabad, the sale of packaged milk outstrips loose milk, the countryside is dominated by the latter.

This paradigm is changing however because of economic growth which is resulting in migration of people from the countryside to the city in search of jobs, money and opportunity.

“There has been a marked shift towards packaged milk, particularly in urban areas, and a decline in loose milk consumption. The conversion from loose to packaged milk will accelerate in the years to come,”​ Sumit Khatter, marketing manager at Tetra Pak India said.

“People have more money, less time and they have moved away from the countryside. They are increasingly living closer to a city grocery store than a dairy farm,”​ he said.

According to research by McKinsey Global Institution, India’s middle class, which numbered around 50 million in 2007, is expected to reach 583 million or 41 per cent of the population by 2025.

According to Khatter, loose milk still accounts for more than 70 percent of white milk sales, but the urban migration means milk from the countryside has further to travel to reach consumers, creating an opportunity for packaged milk retailers.

Tetra Pak research further showed that loose dairy products (LDP) consumption in India is forecast to rise from close to 55bn litres in 2009 to around 60bn litres in 2013.

Approximately 90 per cent of that consumption will be accounted for by white milk, according to Tetra Pak research. Consumption of portion packs [600 ml] is expected to rise from around 10bn litres in 2009 to almost 15bn litres by 2013.

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