‘A win-win’ for milk producers, consumers

CHENNAI: Competition from private dairy players has not deterred the 65-year-old Aavin brand from exploring an entry into north east and north India, near Delhi. Having fortified its presence in Tamil Nadu via 7,000 outlets, adding 100 annually, the Rs 7,400 crore entity is the third biggest co-operative player after Amul and Karnataka Milk Federation (KMF).

“We are talking to the governments in North India and North East, where we are keen to be present,” says N Subbaiyan, MD, Tamil Nadu Co-operative Milk Producers’ Federation (TNCMPF). In fact, Aavin will expand its presence in Kerala by next year besides Andhra (where it is in the fringe areas of Tirupati) making it clear that it does not want to emulate Amul, the brand custodian of Aavin is quick to point out that the strategy is to scout for regions, where the availability of milk and milk products are not enough or complete milk sheds are absent.

“We have the tetra pack portfolio with us and its shelf life makes it possible to transport to north east apart from the terrain advantage,” he says.

Aavin is also awaiting the status of its tender participation in Defence sector. “We will know in two months’ time whether we have been successful or not,” he notes.

A firm believer in oligopoly, Subbaiyan says, such an approach creates a level-playing field for those in the dairy business, while the immediate efforts are on to increase Aavin’s capacity from about 40 lakh litre to 70 lakh litre. “We are not in a running race. Our focus is to beef up our infrastructure and boost cattle feed.” KMF is currently at 70 lakh litre, while Amul’s capacity itself is 470 lakh litres.

“Aavin is a brand that needs no introduction, catering to producers at the grass root level and the consumers. We are a farm-to-fork entity in the real sense. We have a three-tier structure which takes care of procurement, district union-driven products and policy-level directions,” he seeks to point out, as he highlights the strengths of the co-operative enterprise, that now has 4 lakh producers in its fold and a 20 lakh membership base.

“We have 10,000 societies across the state, three district unions, 27 unions and one federation. Our membership base comprises floating members considering the off-season factor,” he says, and adds the sales off-take from Chennai metro is 50 per cent, while other districts of TN account for the balance.

With a milk procurement of 37 lakh litres a day, Aavin sells 30 lakh litres daily, with 15 lakh litres to Chennai alone. A decade ago, its capacity was at 20 lakh litre. “We have seen 100 per cent growth in a decade and our sales volume has also surged from 10-15 lakh litre to 30 lakh. So, both procurement and sales have seen a record 100 per cent growth,” he reiterates.

On the infra front, due to the growing population and a high demand, the federation is working on scaling up to attain the 70 lakh litre processing target by 2024. “This will instill confidence in the farmers as they are migrating out of the sector and the next generation is also not keen to follow the dairy sector. To retain them, our intent is to offer remunerative prices and provide technical support,” Subbaiyan says.

Its facility at Virudhunagar will be ready this year while one more unit is being added at Thanjavur and Cuddalore respectively . While the former will also go live by the year end, the Cuddalore unit will be up and running by 2024. Last year, Aavin’s capex was around Rs 500 crore.

The brand also exports to Middle Asia, south east Asian countries and the US. “Volumes are yet to pick up as we export 50,000 units monthly as the range includes 6-7 variants like tetra pack milk, ghee and dry products,” he says. Armed with 20 products targeting health-conscious consumers (millet based cookies, health mix, probiotic curb, sugar-free ice cream), it is also looking at grouping products as health-conscious, lean, energy, fun and kids special categories.

Aavin, anticipating a 10 per cent turnover rise by next year, is content with its co-operative approach.