Wednesday, June 19, 2024

Milky Mist: Churning a successful dairy story in the south

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Milky Mist was founded in 1992 by Satish Kumar T when he was just a teenager and not yet out of school. Once he took over the business, Kumar took his small fledgling brand that started out selling paneer in cities like Chennai, Coimbatore and Bangalore to spinning its magic wheels across India’s dairy industry. Milky Mist’s USP is that it is the only 100% value-added milk and dairy products manufacturing company in south India with products available across all the dairy categories and across a wide range of SKUs and pack sizes.

The company transports its products across the length and breadth of India, from Kashmir to Kanyakumari. Milky Mist’s key markets lie across the entire southern region of India such as Tamil Nadu, Kerala, Andhra Pradesh, Telangana, Karnataka, and Goa which contribute about 65% of the company’s topline.  The company also has its brand footprint in the Northeast, East India, West India, and in Delhi-NCR in the North. It also exports its products to countries like Sri Lanka, Maldives, Singapore, the Middle East, Bhutan, and Australia.

Clocking Rs. 1,500 crore in turnover for FY22-23, which is expected to reach Rs. 2,200 crore this fiscal, Milky Mist today is among the leading dairy brands in India and when it comes to the dairy industry in south India, it sits right atop the higher ridges of Mount Olympus.

On the grand gradient of corporate journeys, dairy firm Milky Mist’s ride to the top league of India’s dairy industry is as gripping as it can get. Kumar’s father ran a milk business, which was struggling to stay afloat. But before the wheels could come off, Kumar had to step in to bring the business back on tracks. Even as a school dropout, he was able to read the dairy business like a mineralogist would read a rock. From a generic milk supply business, Kumar poured his mind, body and soul into transforming it into a dairy brand and named it Milky Mist

People can accomplish some wildly successful things, given enough determination, skill, and rocket fuel. Once he took over the business, Kumar worked infernally hard to take his small fledgling brand that started out selling paneer and turned it into a leading dairy brand of India. Milky Mist has become the punchline to what a good dairy business is – the company has earned its spurs for its rich diversity of value-added dairy products and their excellent quality and freshness.

A diverse product expanse

Milky Mist is perhaps the only dairy company in the private sector to have a diversified portfolio of valueadded dairy products. Its product expanse covers the whole range – all the way from breakfast to the dinner table, taking care of all the dairy needs of consumers

 “We don’t market liquid milk but we offer the whole range of value-added milk and dairy products. Our USP is that we are the only 100% value-added milk and dairy products manufacturing company in the region with products available across all the dairy categories and across a wide range of SKUs and pack sizes,” says K Rathnam, CEO, Milky Mist, who has been a former MD of Amul Dairy.

Dairy products can be broadly categorized into three product-types: Basic dairy products like ghee, butter, curd, and paneer; Nutritional products like cheese and yogurt; Indulgence products like milkshake and ice-cream. To be a successful dairy company in India, one should be present in all the three dairy product categories and have a large product portfolio.

The brand has over 150 SKUs of Milky Mist products across 20+ categories. This extensive range ensures that the products cater to various consumer preferences and customers have access to a wide selection of dairy products under one brand.

A foolproof procurement system

Retail mavens love to remind that in the Indian dairy sector, unless you have your own procurement, it is impossible to build a sustainable business. The milk business is successful only when one has command over procurement. One needs to command procurement not just in terms of rate but also quality. One has to build a relationship with your farmer so that one can control the milk you procure. Only then one gets economies of scale and can launch better product.

Milk being the essential ingredient in all dairy products, it is the quality of milk and how it is procured that determines the qualitative advantage of the end product. But setting up a milk procurement operation at a gargantuan scale is time and effort intensive and poses serious challenges. Milky Mist, however, has cut through this Gordian knot in its own ingenious way. The company has developed a unique, transparent, and robust milk procurement system to procure the best quality raw milk available.

“If your brand reputation is built on supplying best-quality products, you need to create systems and ensure that some things are always in place,” says Rathnam. The company follows best-in-theindustry practices to ensure the procurement of best quality milk. It has a procurement system under which it collects and buys all its milk directly from the farmers, completely weeding out the role of milk vendors and middlemen. Also, the payment for the milk bought directly into the hands of farmers, thus ensuring that there is nobody else in its milk supply chain.

As Milky Mist collects milk directly from its farmer-members without any agents involved in the procurement process, the quality of milk remains intact as every drop of milk is tested at the collection centers, thus leaving no room for quality deviation to take place. “Our method of direct sourcing of milk from farmers ensures that farmers remain loyal to us and give us pure unadulterated milk,” says Rathnam.

Milky Mist has some 75,000 farmers in its network for milk procurement and sourcing. It procures about 8 lakh liters of milk every day and is on track to source 1 million liters of milk per day in the near future. Interestingly, all of the milk is sourced from within a 100-200 km radius.

The sheer magnitude and scale of Milky Mist’s milk procurement has spawned a mini-white revolution in places like Erode, Salem, Tiruppur, Coimbatore, Namakkal, Dindigul, Dharmapuri, Jolarpet, Krishnagiri, Trichy, and more. Farmers bring their milk to Milky Mist’s automated collection centers located at these places and in the neighborhood villages, where milk is analyzed for quality. As the commission to middlemen has been eliminated, farmers also get to earn Rs.5 more per liter, which acts as an incentive to stay plugged into Milky Mist’s procurement system.

Apart from direct sourcing, chilling the milk at the source and transporting it to the processing plant is another crucial element in the milk supply chain. As a quality product dairy manufacturer, Milky Mist recognizes the critical importance of milk preservation at its source. The company has set up its chilling centers close to its milk collection centers. “We have set up our bulk milk chilling units of 2,000-3,000 liter capacity at the village level itself so as to reduce the travel and transportation time of milk and to ensure that milk temperature at 4-5 degree Celsius degree is maintained, which helps to preserve its quality,” says Rathnam.

Another focus area for the company is the health management of cows. After all, good quality milk can only come from cows that are healthy. Milky Mist partners and collaborates with its 75,000 farmer-members by offering them the necessary support and guidance on animal health management, feed quality, and milking practices. Thus, apart from compensating them fairly, Milky Mist also provides high-quality cattle feed to the farmers, thus ensuring the quality of milk from its roots. . At the same time, by having constant interaction with farmers and through regular check-up of animals, the company help them with fertility improvement of their cows, which ensures that the milk yield keeps improving and farmers get to earn more money from their existing livestock.

Technology in place to take care of product quality

Milky Mist’s technology initiatives reside in many different pockets of the business, but the company has ensured that all its tech platforms are fully integrated with each other, thereby achieving an overall compound impact.

Thanks to its unwavering belief in pushing the quality of dairy products in India, Milky Mist has made impressive investments in bringing best-in-class manufacturing technology to India. For instance, it is one of the few dairy companies in the country to have a Rs.600 crore fully automated robotic manufacturing unit for paneer and cheese. The high level of automation ensures that the entire manufacturing and processing is completely handsfree and there is no direct human contact involved at any point in the manufacturing, processing and packaging of its products.

Milky Mist has built its quality assurance system in such a way so as to take care of food safety and food hygiene aspects while keeping in mind the interests of the consumers at every level.

The company also has its in-house design team to look at the evolving packaging requirements for different product categories. The team has created some excellent designs that are very minimalistic but are appealing and attractive while keeping the products safe and hygienic.

Milky Mist operates its own transport fleet and logistics, which ensure that products are shipped at a temperature that is marked on the product label and the goods reach customers in a pristine state. Besides, Milky Mist also provides chiller units and visi-coolers to retailers to ensure proper cooling of the products and to ensure that they are kept properly refrigerated at the retail points. A fully digitalized soup to nuts digital infrastructure supply chain allows Milky Mist to implement traceability systems that help to track the origin of milk and monitor its journey through the supply chain.

“Digitalization of the supply chain helps us to detect and correct any deviations from the standard protocol and other erratic processes that may arise during the operations. We can track the movement of our products, find out the locations that our trucks are headed for, and monitor many other operational details” points out Rathnam, adding that the company has its own tech solutions department to develop the software and solutions based on its operational needs.

With some 200 vehicles under its wings, the company transports its products across the length and breadth of India, from Kashmir to Kanyakumari. Milky Mist’s key markets lie across the entire southern region of India – Tamil Nadu, Kerala, Andhra Pradesh, Telangana, Karnataka, and Goa – which contribute about 65% of the company’s topline. The company also has its brand footprint in the Northeast, East India, West India, and in Delhi-NCR in the North. The company also exports its products to countries like Sri Lanka, Maldives, Singapore, the Middle East, Bhutan, and Australia

Well-oiled sales and retail operations

With more than 2,500 distributors across India under its fold and with 1,200 employees on its payroll, Milky Mist is focused on strengthening and improving its sales and distribution network to ensure their products reach a wide consumer base spread across over 1,50,000 retail points across the country.An automated sales system generates valuable data that can be used for analysis and decision-making. By tracking sales performance, customer behavior, and market trends, Milky Mist is able to gain business insights, identify patterns, and make informed decisions to drive growth and optimize their sales strategies.

On the retail front, Milky Mist operates across five different trade channels – General Trade, Modern Trade, E-commerce, HoReCa, and B2B. HoReCa is the next big trade channel for Milky Mist products and the company services this market with its regular offerings. “It is our second-biggest trade category after GT and we see a lot of traction for our products in this channel,” says Rathnam

As for Modern Trade, Milky Mist has been ramping up its presence in this trade channel and its share of Modern Trade has been growing consistently year on year thanks to its partnership initiatives with both national and regional retailers. . Milky Mist is a national partner with Reliance Retail and D-Mart and it also continues to work closely with other national and regional retailers as well.

At the same time, Milky Mist has taken a major digital initiative by launching its online store. Cutomers can now shop for products online by ordering its mobile online delivery app. The Milky Mist App currently services cities like Chennai, Kochi, Trivandrum and Thiruvalla and plans are afoot to launch the online delivery service in other places very soon. Milky Mist products are also available with leading online marketplaces like Flipkart and Amazon.

Recently, Milky Mist has taken another major step to enhance its brand’s experience by launching its retail parlours. Apart from the one at the company’s ground zero in Erode, Milky Mist parlours, measuring 200 to 400 sq.ft., have come in Tamil Nadu in places like Udumalpet, Ellispettai, Chithode, Kavindapadi, and Trivandrum, Thiruvalla, Kothamangalam, and Cochin in Kerala. The parlours stock all Milky Mist products which customers can buy and they also have a live kitchen where customers can dine, savor, and experience exciting dishes made with Milky Mist products, which are rustled up by trained chefs. Through these parlours that are part shop and part café cum eatery, Milky Mist is able to showcase its full product range in a controlled environment.

Though our focus as of now is not to get into retailing, we have opened these stores with the purpose of being able to interact better with our customers, understand their needs, gather feedback, and build stronger relationships,” says Rathnam. To expand its network of Milky Mist parlours, Milky Mist has embarked upon the franchise route.

Sustainable operations

It’s hard to draw a better poster boy for long-haul sustainable practices in the dairy industry other than Milky Mist, which is among the pioneering dairy companies in India that does not use grid energy, is power surplus and energy-neutral, recycles the water it consumes, and is on track to becoming a 100% water-neutral dairy company in India.

Until about two years ago, the company operated its own water recycling plant, a 2 MW wind mill and a 4 MV solar plant that together generate about 5 megawatts of power per day. Milky Mist commissioned another solar plant last year with an outlay of Rs. 40 crore, and a 7 MW capacity, demonstrating its steadfast commitment to promote renewable green energy.

The company expects the new plant to reduce 30,000 tonnes of carbon emissions every year, helping it to inch closer to its goal of becoming 100% carbon-neutral in the not too distant future. In fact, Milky Mist is the first FMCG company in India to become power surplus and energy neutral by meeting its energy consumption from renewable energy sources.‘‘For the past year and a half we have remained power surplus and our aim is to remain power surplus and energyneutral for years to come,” says Rathnam.

Another major breakthrough in the company’s sustainability operations and a first-of-its-kind achievement by any dairy company in India, Milky Mist has also become water-neutral of late. Becoming waterneutral involves minimizing a company’s impact on freshwater resources and ensuring sustainable water management. By turning water-neutral, Milky Mist has been able to balance its water usage by implementing strategies to reduce water consumption and actively replenishing or conserving water resources.

Milky Mist is also involved in water rejuvenation projects in a big way and has so far done 170 such projects, mostly in the Cauvery delta stretch. These projects involve the desilting of small rivers, canals, lakes and ponds as well as the planting of trees to improve the water holding capacity of these water bodies. The company has planted close to 4 lakh trees so far. “We provide a large number of tree saplings to our farmers for planting in their fields. We take care not to send out any waste from our effluent-treatment plants. Instead, we generate gas from the waste, which is converted into energy to run our plants. This way, we are converting our energy and water consumption into a virtuous recyclable process, and it has become a hallmark of our sustainability and environmental mission to become eco-friendly and self-sufficient,” avers Rathnam adding that having turned both water and power neutral currently, it is now striving to become carbon-neutral in the years ahead.

“We are exploring to replace some of transportation cargo with electric vehicles and encouraging our distributors to go for EVs, which can distribute our products within a 30-40 km radius and come back to their stations,” says Rathnam, once again, exemplifying the company’s commitment to support clean energy production and sustainable practices in a big way and part of green energy portfolio augmentation.

Future Plans

In the past 3 years, Milky Mist has been clocking a CAGR of 32%, with it topline growth last year touching 42% Y-o-Y. For the fiscal year 22-23, the company’s turnover came at Rs. 1,500 crore and it expects to earn Rs. 2,200 crore this fiscal year. “We expect the growth momentum from last year to continue for fiscal 23-24 as well,” say Rathnam.

The company recently set up a new unit worth about Rs. 600 crore, which comes equipped with the latest UHT technology to manufacture different categories of UHT products. Milky Mist is also on way to launch its icecream and chocolate manufacturing plants besides also working on opening a sweetened condensed milk plant. While the new UHT unit is already operating commercially, Milky Mist recently soft-launched its ice-cream plant and it is looking to build its ice-cream category very strongly. It plans to launch its chocolate manufacturing plant and its sweetened condensed milk plant very soon. It is also open to making fresh investments in ramping up its plants’ capacity further.

This year the company has launched premium and exotic variants of ice-cream under Milky Mist Brand on the occasion of Tamil New Year coinciding with Vishu, Baisakhi and Bihu. . “The state-of-the-art automatic plant has the capacity of 200,000 litres ice-cream per day of hundreds of different variants,” says Rathnam. Milky Mist also plans launching a new category of RTE products like Paneer Tikka, Paneer Crunchy, and more which will be launched in the future.

Speaking of the new Milky Mist products slated to make the market debut soon, Rathnam mentions traditional Indian sweets, ready to eat / cook category products. The company has set its sights on the evolving dairy market and product range in keeping with the emerging dynamic demands and trends.

The entire range of Milky Mist Dairy products is available across top F&G retailers such across India. Other than the leading groceries, Milky Mist Dairy products have a network of prestigious foodservice and institutional clients like Taj Group of Hotels, ITC Group of Hotels, Le Meridien, Residency, Lalit Ashoka, Leela Palace, Grand Chola, TAJ Flight Kitchen (Madras) Ltd., Sky Gourmets P. Ltd., MTR, CRPF Canteen in Chennai, and military-run department stores, to name of few. The company enjoys a strong foothold in the whole of south India.

Going ahead, the company wants to become a truly pan-India dairy player. It has plans to push its footprints further into its existing overseas markets like the Middle East, Sri Lanka, Singapore and Australia and also look for fresh newer frontiers and opportunities.


India’s dairy industry is growing very steadily and the growth in the value-added segment has been around 15-20% annually depending on the product category. Indian consumers are looking for good quality differentiated products and the overall demand for dairy products is growing stronger, which betokens a bright future for the industry ahead with no signs or semblance of any slowdown over the next 5-7 years. “The bread is big enough for everybody to get a bit and there is plenty of room for all dairy players to grow their market share and customer base,” says Rathnam. But what goes untold is that those like Misty Milk, which have good products, technology and service at their command, have better prospects for their dairy business.

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