Case: National

Dairy-Defending
Market Leadership
Presented by:
Ammar Pasta 20230130055
Shourya Singh 20230130090
Soumya Patel 20230130093
Sumit Shrey 20230130095
Tanvi Choraria 20230130098
GROUP 5
 External Environment
Players like Pure Milk and Annapurna quickly gained market share in the packaged milk segment due to low
Threat of entry barriers for new dairy processors.
new entrants Due to National Dairy's previous monopoly, it had little experience with competition.
The distribution and supply chain of National Dairy was the focus of new competitors.

Buyer’s Power Due to new competitors offering higher margins and incentives, buyer power has grown dramatically.
(Distributers, retailers) Retailers can now legitimately make threats to switch providers.

Farmer’s While cooperatives and unions have more clout over National Dairy, individual farmers have less clout.
bargaining power Farmers are displaying low switching costs by selling to competitors and middlemen.

Danger of There is a greater risk of substitutes for other dairy products than for the core milk product.
substitutes
The rivalry among current competitors has increased from low levels due to monopolies to high levels due
Existing Rivalry to the specific targeting of National Dairy by Annapurna and Pure Milk.
-Discounts, promotions, and focusing on National Dairy's supply chain are some of the tactics used.
 Political
PESTLE
Stable government: Odisha had a stable government, potentially providing
consistent regulations and policies.
Government support for cooperatives: The government offered some
support to cooperatives like National Dairy, but this could change
depending on political priorities.
Potential regulatory changes: Upcoming regulations could impact milk
pricing, procurement, and distribution, affecting National Dairy's
operational costs and market dynamics.
Economical
Growing economy: India's economic growth led to rising disposable
incomes, increasing demand for dairy products.
Urbanization: Rapid urbanization created new markets for packaged milk
and value-added dairy products.
Inflation: Rising inflation could put pressure on National Dairy's costs and
consumer spending power.
Environmental
Climate change: Droughts and extreme weather events could impact milk
production and availability.
Water scarcity: Water scarcity could pose challenges for dairy farming and
processing.
Sustainability concerns: Consumers were becoming increasingly concerned
about the environmental impact of dairy production, forcing National
Dairy to adopt sustainable practices.
Social
Increasing health awareness: Consumers were becoming more
health-conscious, driving demand for nutritious dairy products.
Changing lifestyles: Busy lifestyles increased demand for
convenience foods, including packaged milk and ready-to-drink
beverages.
Lactose intolerance: Growing awareness of lactose intolerance
could create a niche market for lactose-free dairy products.
Technological
Advancements in processing and packaging: New technologies
could improve milk quality, shelf life, and product variety.
Rise of e-commerce: Online platforms could offer new distribution
channels for National Dairy.
Increased automation: Farms and processing plants could improve
efficiency and reduce costs.
Legal
Food safety regulations: Stricter food safety regulations could increase
compliance costs for National Dairy.
Labor laws: Labor laws and regulations could impact employee costs
and workforce management.
Competition regulations: Antitrust laws could limit National Dairy's
ability to respond aggressively to private competitors.
The threat was on the way 1,400

1,200

The market share notably decreased from 100% in 2007 to 96.5% 1,000
1 in 2010, with significant yearly declines. 800

600
Rivals were aggressively pursuing National Dairy's consumer base
2 and market share.
400

200

Several distributors were declining to sell National Dairy's milk or 0

3 expressing cautions of substantial cutbacks in orders.

11 02
5 02

60 02

80 02

90 02

01 2

21
70 02
0

-
-4

-
-

0
50

70

80

90

11
60

10
002
Pure Milk and Annapurna have margins of up to 1.15 per liter over NET PROFIT (AFTER TAX)
4 National Dairy.

2005-06

2006-07

2007-08 ORGANIZED DISTRICT

2008-09
CO-OPERATIVE
SOCIETIES REGISTERED
2009-10

2010-11

0 500 1,000 1,500 2,000 2,500

Growth Rate

Sheet can be accessed at: https://docs.google.com/spreadsheets/d/1JR9b99oJJ-7Ank1vga0aeCC_I4iVkJvTJt05zQrpwHw/edit?usp=sharing

The packaged milk segment is growing at a healthy rate of 10.87%, with an overall revenue CAGR of 10.68%.
Despite the positive CAGR, packaged milk's YoY rates fluctuated, declining in 2009-10 when Pure Milk and Annapurna
entered the market.
Almost 85% of National Dairy's revenue comes from packaged milk, making it vital.
Only 15% of total sales come from other product categories, which are fiercely rivaled by national players like Amul,
Balaji, and Anik.
Sales of packaged milk appear to have been impacted by the arrival of major competitors in 2009–2010, highlighting the
difficulties presented by new players in the market.
 Impact on National Dairy’s
Previously owning a 100% market share,
overall profitability
National Dairy is now up against more
and more competition from Pure Milk
and Annapurna.
The new rivals have amassed a 5%
market share in just five years.
There has been an evident impact on
profitability since the competitors joined
the market in 2009.

The table shows that the gross and net profit margins have stayed constant, indicating that reasons other than
competition might be driving the decline.
The market dynamics for National Dairy have changed due to the introduction of Pure Milk and Annapurna.
The fact that the drop is not exclusively attributable to the competition suggests that other variables, such as CSR
initiatives, may also be involved.
A more diverse market share has resulted from the erosion of National Dairy's market dominance.
The information suggests that to stabilize and strengthen its position in the market, National Dairy must deal with
several issues outside of competition.
 Limitations
Bureaucratic Processes: As a quasi-government
organization, National Dairy is subject to bureaucratic
procedures and regulations, leading to slower decision-making
and reduced flexibility compared to its private competitors.
This can hinder timely responses to market changes and
innovation.
Limited Product Portfolio: Compared to the diverse
offerings of private players like Sudha and Parag, National
Dairy's product portfolio primarily focused on packaged milk,
ghee, and other traditional dairy products. This limited
portfolio might not cater to evolving consumer preferences
for variety, convenience, and value-added products.
Marketing & Distribution: National Dairy's marketing and
distribution channels, particularly in urban areas, were less
efficient or extensive than its private competitors. This limited
its reach and ability to connect with a broader consumer base.
Potential Levers
Strong Brand Name and Loyal Customer Base:
National Dairy enjoys a firm brand name and established
customer loyalty in Odisha. This strong brand recognition
can be leveraged to build trust and attract new
customers.
Extensive and Efficient Production Network:
National Dairy possesses a well-established production
network with large-scale capacity and economies of scale.
This advantage can be utilized to optimize production
costs and maintain price competitiveness.
Government Connections and Support: As a quasi-
government entity, National Dairy has potential access to
government resources, support programs, and advocacy.
This could provide an edge in procurement, subsidies, and
market access.
Product Diversification: To satisfy changing consumer tastes and gain market Strategy
share in related categories, introduce new dairy or value-added goods.

Cost Optimization: Reduce costs by renegotiating supplier contracts or

optimizing distribution networks to boost efficiency and price competitiveness.

Retail Margins: Retailers who meet a quarterly target get higher margins. For
sales exceeding the objective, we give a larger margin.

Incentivization: To retain key distributors via loyalty programs and financial

incentives. Farmers without contracts receive fewer subsidies.

Marketing & Branding: Use targeted advertising, promotions, and

collaborations to boost brand awareness and consumer loyalty.
Fin.