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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.

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