BRITANNIA
TO BOTTLE UP MILKMAN BRAND FOR GOOD
Britannia has pulled down the curtain on its 'Milkman' brand
of fresh milk. The company has decided to exit from the milk
business as profits are not in line with its expectations.
"Yes,
we are exiting from the milk (business). We have already pulled
out from Kolkata and are planning to do so from Mumbai as
well," Pavan K Malik, CEO, Britannia New Zealand Foods,said.
Britannia
Industries' had transferred its dairy business to Britannia
New Zealand Foods, a joint venture with New-Zealand based
Fonterra Cooperative Group, in '02. The company had drawn
up ambitious plans for the dairy business.
With
products such as milk, cheese, butter, ghee, flavoured milk
and dairy whitener in its portfolio, the company aimed at
becoming a prominent player in the Indian dairy industry.
The
New Zealand Dairy Board, one of world's largest milk companies,
was also expected to bring some of its global brands to India.
But things did not play out as anticipated by the company.
The
JV company faced competition from Amul, Mother Dairy and small
regional players including Paras, Milma, Aavin, Vijaya, Mahananda
and Aarey. "Britannia became fussy about margins and
bottomline when it entered into a JV with the New Zealand
Dairy Board.
The
company charged a premium when milk prices were already high,"
industry sources said. "Why would consumers pay extra
for Britannia milk when other household milk brands are sold
cheaper?" they added.
These
sources attribute Britannia's milk debacle to the lack of
back-end support. According to them, the company did not have
a sound sourcing base and had to depend on various private
dairies to pack its products. Unlike co-operatives, the milk
prices charged by these dairies fluctuated with the market.
As a result, Britannia was unable to manage its costs.
Mother
Dairy and Amul are large players with a core competency in
milk sourcing and distribution. They determine milk prices
and small players follow suit. Britannia, however, was determined
to sell at a premium without being sure of its supply.
The
company hoped that it would pull through in Kolkata, Mumbai,
Pune and Hyderabad but it was not able to meet with much success
there either, the sources added.
