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Published on: Sept. 25, 2022, 9:55 p.m.
Creamline Dairy Products takes a fresh stance
  • The company is investing Rs20 crore in its plant located at Keshavaram in Telangana

By Arbind Gupta. Assistant Editor, Business India

Having rebranded as Godrej Jersey from Jersey, Creamline Dairy Products Ltd (CDPL), the leading dairy player in Southern India and a subsidiary business of Godrej Agrovet Ltd, is looking to significantly expand its presence in the value-added (long shelf life) product category, even as it is now consciously looking to take this brand to newer markets in the northern India from being primarily present in markets like Telangana, Andhra Pradesh, Tamil Nadu, Karnataka and parts of Maharashtra. 

This follows the Hyderabad-based dairy entity promoted by K Bhasker Reddy and D Chandra Shekhar Reddy way back in 1986, was acquired (over 51 per cent stake) by the subsidiary of Godrej Industries Ltd in 2015 and subsequently rebranded in September 2020 to Godrej Jersey from Jersey, the original brand of CDPL. The rebranded entity is aiming to take its revenue to over Rs2,000 crore in the next 2-3 year from around Rs1,175 crore in FY22 and Rs1,032 crore in FY21. 

In fact, backed by a series of initiatives towards market expansion and diversified product offering, this Godrej Group company is ambitiously targeting a topline of around Rs1,500 crore in the current fiscal year. India’s organised dairy sector is likely to achieve 11-12 per cent revenue growth this financial year, the second straight year of double-digit growth, mainly driven by healthy demand for value-added products.

However, revenue growth of the organised dairy sector this financial year will be a notch below the last fiscal’s 13 per cent growth, according to a report by Crisil Ratings. However, the report says that operating profitability would moderate to 5 per cent this fiscal, because of a rise in procurement prices as well as transportation and packaging costs.

CDPL which has an aggregate milk processing capacity of around 1.36 million litres per day across 10 processing plants and around 100 collection centres, recently forayed into northern parts of the country, mainly Mumbai, Delhi and states like Punjab and Himachal Pradesh with a range of long shelf-life products like favoured milk products, whey-based energy drinks and other milk products like fruit yogurt, Ghee and Paneer. In the last few years, the company’s portfolio of value-added milk products has almost doubled to around 35 per cent of its total portfolio even as the company now aims to take it to around 40 per cent in the next 2-3 years. 

“Over the years, Jersey created an exciting product portfolio and become a household name and a preferred dairy brand amongst millions of homemakers in southern India. Keeping in mind the evolution and its association with iconic brand Godrej, Jersey has now started on the path of forging a new, improved brand identity, which will help the company to emerge as a pan India player with a much stronger portfolio of value-added products,” says Bhupendra Suri, CEO, CDPL (Godrej Jersey).

Leveraging brand

In 2015, Godrej Agrovet, the largest animal feed manufacturing company acquired 25 per cent of additional stake in CDPL at an investment of around R150 crore. Before this deal the Godrej group company was already holding 26 per cent stake in this company since 2005. Following this deal, Godrej Agrovet became a majority shareholder in CDPL with over 51 per cent stake and entered the country’s dairy space full-fledged. The dairy market in India reached a value of around Rs13 lakh crore in 2021. Looking forward, IMARC Group expects the market to reach around Rs30 lakh crore by 2027, exhibiting at a CAGR of 14.98 per cent during 2022-2027. 

  • Suri: creating an exciting portfolio

    Suri: creating an exciting portfolio

Experts are of the view that as the company scales up its operations in new geographies, CDPL can get immense leverage through the Godrej brand, which has a strong recall across the country. 

“Early on we were offered a minority stake in CDPL. When we were offered majority stake we decided to invest as we believe that integration across the chain is beneficial in animal husbandry. As the company grows in scale and increases the salience of value-added products, profits will improve significantly. Godrej Agrovet has made many path-breaking innovations in feed and breed which through backward integration will help CDPL become very competitive. We see a good future for CDPL,” says Nadir Godrej, chairman & managing director, Godrej Industries Ltd.

“Dairy brands are usually limited to a regional base, but now with the Godrej brand and its pan India equity and distribution, Creamline has the potential to compete with the national dairy brands,” says N. Chandramouli, CEO, TRA Research, a consumer-analytics and brand insights company & publishers of TRA’s Brand Trust Report.

“Having faced a challenging Covid period, the company has made an impressive comeback in the last few quarters primarily led by market share gains in value-added products. The performance was led categories like curd, milk drinks and ghee. We have maintained our focus on strengthening the market position, increasing the brand awareness and new products development,” adds Suri.

Suri, a BTech from IIT BHU, Varanasi and PGDBM from XLRI, Jamshedpur, joined CDPL in December 2020. His prolific career spans nearly three decades of which 23 years were with Coca-Cola where he performed various roles in sales, distribution, supply chain, RTM and franchise bottling operations. He was the managing director of Coca-Cola, Nigeria till 2019. He also worked with Bajaj Auto Ltd and Asian Paints. His last stint was with Creambell India, where he was responsible for running the Creambell Ice-cream business in India.

While FY22 saw revenue growth of around 14 per cent, CDPL’s profitability was impacted due to high inflationary pressure on milk procurement prices as well as fuel and packaging material costs. The sharp rise in input costs could not be transmitted as no price hike was taken by the regional players in the key markets in the first nine months of FY22. Although, there was some pricing action in fourth quarter of the year by major players, the increase was marginal and insufficient to absorb entire input cost inflation.

During the last fiscal, the company under the brand name Godrej Jersey launched new variants of Jersey Recharge energy drink, fruit yogurt as well as paneer and ghee. CDPL’s whey drinks category has been receiving excellent market response, even as it has introduced two more flavours during the year – Mango and Apple. It also expanded sales of Godrej Jersey milk beverages to northern parts of the country, mainly Delhi, Punjab and Himachal Pradesh. The company also successfully carried out massive customer outreach programme for “Jersey Ghee”.

Buoyed by this success, Godrej Jersey has recently launched another variant of flavoured milk i.e. Nutty Badam flavoured milk. Made with full-cream milk and loaded with real almond (badam) bits, it is a healthy drink for consumers who prefer to drink a healthy and filling beverage and also like to chew on nutritious almonds. Staying true to the product’s benefits, the tagline of Godrej Jersey Nutty Badam Milk, ‘Yummy Doodh, Crunchy Badam’, aptly supports the changing consumer perception and milk consumption.

  • Godrej Jersey parlour

    Godrej Jersey parlour

Building a promising category

“Despite being one of the largest producers in the world, per capita milk consumption in India is comparatively low. As one of the leading brands in the flavoured milk space, launching Nutty Badam milk is part of our effort towards nudging India towards a healthier lifestyle. Packed with soothing flavour and real almonds, it offers consumers a protein rich, nutritious and tasty drink with the goodness of milk and real almonds,” states the CEO of Godrej Jersey

Experts believe that flavoured milk has been a promising category which has been breaking the hurdles faced by regular milk consumption. It consists of essential nutrients, such as potassium, proteins, zinc, calcium, carbohydrates, phosphorus, and vitamin D, A and B12. It aids in building and repairing muscles and is a healthy post-workout and hydration beverage.

It also helps improve immunity, metabolism, and skin texture, building bones, promoting healthy teeth, and meeting calcium requirements in the body. According to industry estimates, the flavoured milk market in India was worth Rs3,320 crore in 2021. A recent report by IMARC Group expects this category to reach Rs12,770 crore by 2027, exhibiting a CAGR of 26.01 per cent between 2022-27. 

Earlier on the World Milk Day i.e June 1, 2022, the company, in pursuit to strengthen its long shelf life product category launched an apple flavoured energizing drink under its sub brand `Recharge’. At a pocket-friendly Rs10 for the 180 ml pack price point, Recharge is a rejuvenating drink infused with whey protein. Recharge is now available in four distinct flavours (Apple, Mango, Orange and Lemon) across Telangana, Andhra Pradesh, Karnataka, Tamil Nadu, Kerala, Delhi, Punjab, Mumbai and Nagpur.

With the launch of these category-defining products, Godrej Jersey aims to double the revenue of flavoured milk category revenue by FY24. All these recent initiatives have already started bearing fruits. As per the quarter results ended on June 30, 2022, CDPL has clocked revenue of Rs393 crore witnessing around 48 per cent year-on-year growth, following expanding portfolio of value added products which will going forward also boost its margins. The value-added milk products command higher average margins of around 16 per cent as against around 9 per cent in case of liquid milk. 

While the company is aiming to strengthen its position in the exiting market and also expanding to newer territories, it is also strengthening its infrastructure for processing, procurement and other functions. The company is investing Rs20 crore in its plant located at Keshavaram in Telangana. This will more than triple its processing capacity from 22,000 litre per day to 70,000 liter per day.

Backed by a work force of around 1,800 people, the company currently has 10 processing facilities (total capacity 1.36 million litres per day) for milk and milk products including one modern milk powder plant at Ongole, AP. These facilities are spread across five states including AP, Telangana, Tamil Nadu, Karnataka and Maharashtra. The company markets its products through a well laid distribution network comprising of distributors, agents, parlours and exclusive franchise outlets. It has around 3,300 distributors for milk and milk products and around 400 Godrej Jersey brand outlets.

  • Godrej Jersey's Keshavaram plant

Quality & supply security

Going forward, CDPL will continue with its aim of growing milk volumes through customer activation plans for each of its markets. This will be supplemented by strengthening the direct milk procurement network which is a prerequisite to providing quality and supply security.

In the VAP category, focus will remain on launching new products based on market research coupled with accelerated consumer outreach and expansion of distribution channel in the existing markets. “Higher volume growth and improvement in realisation on the back of price hikes are expected to drive CDPL’s return to profitability in the coming years,” says Suri.

The domestic dairy sector has seen substantial foreign direct investment (FDI) constituting about 40 per cent of FDIs in domestic food sector. To facilitate the infrastructure growth, Central and state governments have been releasing various incentives to attract investments in this sector.

The Department of Animal Husbandry & Dairying, Government of India, with a view to provide dedicated focus towards promoting and facilitating investments in the domestic dairy sector, has recently also set up Dairy Investment Accelerator under its Investment Facilitation Cell. 

India has been the leading producer and consumer of dairy products in the world. At 210 million tonnes of annual milk production, India accounts for about 23 per cent of global milk.  Annual milk production in the country has grown by 6.4 per cent CAGR in the past five years.  Dairy is a high priority sector for Government of India due to its socio-economic significance.

It is the single largest agricultural commodity contributing 5 per cent of the national economy and employing over 80 million farmers directly. Further, the country boasts a large domestic packaged dairy products  of market worth Rs2.7-3.0 lakh crore witnessing a strong double-digit growth. 

With all these developments in place, CDPL, is looking to position itself strongly in the market. From being a regional player in the dairy space, the company led by Godrej Jersey brand is now foraying into other geographies. Here the rebranding into Godrej Jersey from Jersey will help the company immensely since Godrej is an iconic and well trusted brand across multiple segments.

In another strategic move, the company has consciously decided to expand its portfolio of value-added product where apart from robust demand scenario, the average margin is quite attractive and thus it will help the company in adding to its bottomline.

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