India's Mother Dairy: The packaged bridge from rural to urban

Subhashis Basu, the business head, dairy products, at Mother Dairy, one of India’s largest packaged food companies, talks about the market.

Are you seeing more demand in the urban or rural areas?

The demand for packaged foods is growing across India, whether it is rural or whether it is urban. We are seeing a huge upswing in demand in the rural segment. However, the last few months have not been so good because of bad rains – because the rural economy is still dependent on agriculture and agriculture is dependent on good rain. But if I look at the long-term trend, rural and urban demands are increasing. The category of products might vary. For example, ice cream will be more of an urban-led phenomenon. That is primarily because there is an absence of a frozen cold chain at the rural level.

Could you talk about Mother Dairy’s growth strategy?

We have grown into the second-biggest packaged food company in India. But a few years back, we were primarily a Delhi-based company with a very limited portfolio and primarily selling through our own retail outlets. We took a call that to grow we would have to evolve to selling across mom-and-pop stores and modern-trade stores across the city, and secondly expand the footprint nationally, and evolve our portfolio to value-added products from having just basic products. The first steps are to go into the urban areas because there is a huge urban market to be tapped in India, so even over the next five years our focus will be primarily urban markets.

What are the biggest challenges in the market?

In terms of the new products, there is dilemma among many manufacturers about how much to invest in new categories. We are continuously working on Indian formats of food and western formats and trying to find a bridge between the two. The cold [storage] chain across the rural areas and smaller towns is one of the biggest challenges.

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