Financial Daily from THE HINDU group of publications
Saturday, May 17, 2003
Corporate - Announcements
Hatsun Agro sets new trend for pvt dairies Introduces fortnightly, monthly milk cards
CHENNAI, May 16
HATSUN Agro Product Ltd, the Rs 300-crore private dairy, is looking to monthly milk card sales to widen its market share. This is a new initiative for a private milk brand, and it is expected to help Hatsun achieve significant growth in turnover for the current year, according to Hatsun's Managing Director, Mr R.G. Chandramogan.
Hatsun has commenced promotional efforts to push milk sales through a monthly card system for its Arokya brand in Chennai. As a part of a trial offer for its consumers, it is selling 15-day coupons at a discount of about 20 per cent. Each coupon entitles the holder to half a litre of Arokya milk per day for 15 days, door delivered. As a part of the initial offer, this will be followed up with a monthly card at a discount.
This is expected to pave the way for the regular monthly card. Arokya milk will be available Re 1 per litre cheaper to the cardholders. It sells at Rs 16 per litre in the retail now. Consumers will get half litre at Rs 7.50, and the discount will be absorbed between the manufacturers and the dealers, he said.
According to Mr Chandramogan, a monthly card sale is the trend that private dairies will have to move to. Milk sales have over the last few years clearly shifted away from commodity-based business to branded product sales. Establishing a brand, which Hatsun has effectively done, and cornering a major share of the market, which it is doing now, are the two imperatives, he said.
Card sales help the seller and the buyer. To the consumer, it offers the convenience of door delivery and getting over with the monthly milk expense at the start of the month-a welcome convenience for the middle class, which works on a tight monthly budget. To the company, it offers an opportunity to rope in a bulk market, he said.
Through this initiative, Hatsun hopes to emerge the clear market leader among the private dairy brands in Tamil Nadu. It is targeting about 2.5 lakh monthly card sales (half litre per card per day) over the next four months, most of it being new buyers. This will mean an additional 1.25-lakh litre milk sales under the Arokya brand. Concerted marketing effort backed by an ad spend of Rs 12 crore for Arokya, with Rs 8 crore marked for Tamil Nadu alone, and the brand's reputation for quality will help sustain this effort. Hatsun's annual budget for ads is about Rs 20 crore. This is expected to contribute to achieving Hatsun's target of Rs 450-crore turnover during the current year, he said.
Hatsun procures and markets over 6.25 lakh litres milk per day out of which over 1.55 lakh litres is sold in Chennai. It expects to be selling 2.5 lakh to 3 lakh litres by March 2004, he said.
Hatsun Agro has three main product lines, which include Arokya and Komatha brands of liquid milk, and Arun, the super premium ice creams, which contributes about 11 per cent of its turnover. With dairy units located at Kanchipuram, Salem and Madurai, the company has a spread sufficient to cover the State. It also has a dairy in Belgaum, Karnataka, which has helped it to cover north Karnataka and Goa, where it procures and markets about 1.40-lakh litres milk. The company is looking at setting up a unit in Tirunelveli, which will give it an improved access to markets in the South and Kerala, he said.
Milk powder unit in offing
HATSUN Agro Product Ltd is setting up a Rs 6 crore milk powder unit in Kanchipuram, about 75 km west of Chennai on the Bangalore route, according to Mr R.G. Chandramogan, Chairman and Managing Director, Hatsun Agro Product Ltd.
The milk powder unit is expected to commence operations in about two months, and will have the capacity to process about one-lakh litres of milk per day to produce about 10 tonnes of powder. This represents a significant advantage to the company and the dairy farmers supplying milk to Hatsun, he said.
The company procures and markets about 6.25 lakh litres milk per day. But during the flush season, there is an additional 15 per cent coming in, which the company has to push hard to sell. But with a powder plant, the pressure can be handled and farmers have an assured market, he said.
Milk powder is an input that dairies use to process liquid milk to marketable standards of quality in terms of fat content. Hatsun will now have a captive source of milk powder that will help it to absorb milk during the flush season and make up to liquid milk during the lean season, he said.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | Home |
Copyright © 2003, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line