News and analysis of Indian technology and entrepreneurial economy

The Indian dairy industry is worth 11357 billion Indian rupees, of which nearly 60% of processed milk is consumed in the form of liquid milk

With Dairy.com acquiring Mr. Milkman, a new trend will emerge in the country’s dairy technology market

Mr. Milkman is a SaaS-based supply chain platform that helps dairy companies manage production and other operations.

India is the world's largest dairy product producer. The market value of this industry in the country will reach INR 11357 billion in 2020, and it is expected to grow to INR 23243 by 2026 at a compound annual growth rate of 15.4%. 

Although many companies have tried to break into this market due to the large number, few have succeeded. Among those who are successful, most are state-owned or cooperatives. The latest failure story comes from Danone, which had to close its dairy business in the country after three failed attempts to enter the market.

Unlike Danone, US-based Dairy.com recently acquired Mr. Milkman, an Indian SaaS start-up company, and it plans to carry out B2B-level work in India. It hopes to cooperate with partners in the Indian dairy industry to help them with quality and supply chain management, manufacturing execution systems, and dairy company analysis through information technology services and intelligence. 

To date, Dairy.com has provided services for more than 60 Indian dairy brands with its SaaS-based supply chain model, and has helped them manage different aspects of dairy product distribution, supply chain, customer subscriptions, and delivery requests through an integrated platform. Looking ahead, Dairy.com plans to continue to operate under the same name; as its existing team expands. 

"We were founded 20 years ago. In the United States, more than half of the milk, to some extent, shape or form, is calculated and tracked using our system. Time zone also helps: it is a 24/7 Industry. Animals never stop making milk. With our business in India, we can find people on the other side of the world at any time; this will be their normal working day,” said Ryan Mertes, Chief Solutions Officer at Dairy.com Said in a conversation with Inc42.

"A unique aspect of our software is that we can track ingredients, not just whole milk. By being able to track components and how they are used, it helps to maximize profits. When asked how to communicate Dairy through Mr. Milkman. com’s expertise, Mertes said, it’s important whether I can get the maximum number of products from the same amount of milk. 

Mr. Milkman’s founder, Samarth Setia, interjected: “Our idea is to let every liter of milk pass through our system. You mentioned earlier that milk is a product with very low profit margins. Due to lack of efficiency and lack of traceability. And many large companies cannot determine where they are losing money. It is a product with very low profit margins." 

In India, dairy farmers sell approximately 60% of the milk they produce to commercial value chains and unorganized dairy factories, while retaining nearly 40% of their milk for household consumption. In stark contrast to the United States, the dairy industry in the United States is dominated by large dairy factories or centralized animal farms (CAFO).

According to Mertes, some of the prevailing dairy industry trends in the United States (large dairy farms producing large amounts of milk and dairy products and transporting them over long distances) will occur worldwide. Through the acquisition of Mr. Milkman, Mertes hopes to combine the best practices of dairy products in the United States and India to provide unique solutions suitable for the country. 

According to industry estimates, about 70% of processed milk in India is sold as liquid milk, and the rest is used to make value-added products such as butter and yogurt. Among value-added products, ghee (clarified butter) and butter are still the most popular, while the demand for fermented dairy products such as yogurt, yogurt drinks and cheese is still relatively small, although they are growing rapidly. 

Most people consume liquid milk-a low-margin product-and the unorthodox and unorganized nature of the dairy supply chain has caused foreign companies like Danone to fail in India. 

Both Setia and Mertes believe that India's organized dairy industry will begin to grow exponentially in the country.

Unlike Danone, Dairy.com decided to shorten the learning curve by acquiring a company with a deep understanding of the local market. Here, Mr. Milkman meets the requirements. Before entering the B2B business, it began to provide B2B business to its dairy industry customers, allowing customers to order dairy products online. 

India’s transportation problems and insufficient cold chain mean that milk can only be consumed in a short period of time, which greatly shortens the delivery window. With the experience of delivering milk directly to consumers, Mr. Milkman is already working hard to solve this problem. 

"Our idea is to let every liter of milk pass through our system. Because of inefficiency and many large companies are unable to determine where they are losing money, liquid milk is a product with very low profit margins. When we apply our end-to-end When using a supply chain management system, we can turn small profits into big profits because we can determine where the losses are,” Setia explained. 

When asked about the main growth trend of the global dairy industry, Mertes gave the answer in one word-traceability. He first pointed out the milk scandal in China in 2008, when 50 babies died of kidney stones and other kidney damage. An estimated 54,000 babies were hospitalized after being fed milk powder that was later found to be mixed with melamine: melamine is a toxic Of industrial compounds used to make plastic tableware. 

"Nowadays, people are more concerned about knowing what exactly is in infant formula and the food they eat. Is it organic? Is it kosher or halal? It introduces more variables in the production cycle. Because if you You have to make those different kinds of milk or dairy products, you have to make them in a specific order," Mertes added.

He asserted that Dairy.com's service can help the dairy industry measure the composition of milk, thereby making its processing more efficient and cost-effective. In addition to India, Dairy.com has other global ambitions. It has established a business, and from there they plan to expand to the European continent. As it said, India is the company's first foray into Asia, but it won't be the last.