Oct 13, 2020
Parag Milk Foods is going to focus on its consumer business by launching new products as it is facing a slump in demand for milk products from the HoReCa segment, which is still reeling from the impact of the pandemic and it contributes around 10-12% to Parag milk’s business. While there have been challenges for the segment in the last few months, Parag Milk is hopeful of recovery going ahead, as restaurants and hotels focus on takeaways. Parag has also taken initiatives to compensate for the loss of business from these segments by increasing our sales in the consumer segment.
In recent months, although out-of-home consumption of food has declined, consumers are experimenting at home and trying out different recipes. So Parag Milk has tried to tap this trend by launching products such as mozzarella cheese, pizza cheese and shredded Mexican blend cheese, though they are offering these products to restaurants for a while now.
The Company boldly believes that their products are more premium than Amul, but almost on par with Britannia’s prices. They are priced at a 10-15% premium keeping in mind the differentiation offered. This is why value-added consumer products contribute around 80% of the sales, up from 68% in pre-Covid times.
Consumers now prefer to go to a nearby general trade outlet and buy bigger pack sizes of products to minimize store visits. They are not looking for discounts these days and, therefore, not visiting malls or modern trade stores. Hence, Parag is focusing on weighted distribution and increasing our stock keeping units (SKUs) and range in these outlets. Even though it is on e-grocery platforms like Big Basket and Grofers for years, they still contribute a smaller share to the overall pie. The company also had tied up with a few milk delivery players for Gowardhan; however, although these are growing platforms, they are yet to figure out ways to deal with distribution challenges. A lot of products need temperature-control and hence, e-commerce is not an ideal channel to sell them.
Being a dairy company primarily, Parag has been establishing a presence in the health supplements market. With pandemic and gyms being closed, still it is the only domestic brand in this category and has started seeing recovery. Within two years, this category now contributes almost 7% to the business. It is a `2,500-3,000 crore market, which has been growing at almost 15%year-on-year. The Parag products are present in 1,500-2,000 modern trade stores and nutrition outlets.
About 82-85% of the dairy industry in India is unorganized, but recently we have seen that consumers are moving towards packaged products, due to hygiene and safety concerns. Under Parag’s Pride of Cows range, products reach the consumer’s home directly from the farm, with minimum human intervention and have now extended the brand after nine years by launching ghee and yogurt.