Engage with India, says Rabobank

The time has come for global players to start engaging with one of the largest volume dairy markets in the world, the agricultural bank Rabobank says. The Indian dairy market is complex, particularly for foreign players and past failures indicate that getting the strategy and timing of entry right, is challenging. However, India dairy is emerging as a strong consumption story, with the market growing at a pace. Rabobank expects this trend will gain momentum over the next four to five years driven by increasing consumption of value-added products and the formalisation of the value chain.

“For years, the Indian dairy market has remained an enigma for global dairy players,” Rabobank analyst Shiva Mudgil says. “Currently, however, the market is in a transition phase. High market growth and favourable market conditions may make now the right time for global players to engage with the Indian dairy sector.”

India’s large consumption market, its existing milk supplies and established consumer preference for dairy products has encouraged global dairy companies to engage with India in the past. However, the challenging environment, with its informal fragmented supply chain, raw milk quality concerns, small base for value-added dairy products and ever-changing trade regulations, proved a challenge and a strong disincentive.

Nonetheless, India’s formal dairy market has shown strong growth in recent years, which is likely to accelerate due to product innovation, enabling government policies and industry consolidation.