Dairy major, Heritage Foods Pvt Ltd, has decided that the path to growth lies in increasing the portion of value-added products (VAP) rather than focusing on liquid milk entirely. Hence, it has outlined plans to enhance the business share of VAP from current 22% in its current portfolio to 40% within four years. To do this, the company plans to come up with new varieties of yogurts, butter milk, lassi, flavoured milk and ice cream.
The VAP industry vertical have been growing at a 20% CAGR over the last four years. These products attract the attention of stakeholders as their profit margins are almost double compared to that of loose milk.
Recently, Heritage Foods entered into a joint venture with French dairy company, Nova Dine to enter into fruit flavored yoghurt domain to increase it VAP range. It is also scouting for opportunities to grow inorganically to achieve underlined growth and targets.
Brahmani Nara, ED, Heritage Foods said, “As a leading dairy brand with a strong presence in South India, we strengthened our presence in the northern region after acquiring Reliance Dairy. We believe Heritage is smartly straddling the high-returns pouch milk segment and high-growth and margin accretive medium shelf life curd and yogurt segment. We plan on focusing in segments that entail high margins and low working capital.”
Heritage’s products are not only sold in India but are also exported to countries in Europe, the Gulf and several nations in Asia. In addition to a dairy plant in Andhra Pradesh, it has processing units at 16 locations to supply fresh milk close to its consumption centers. These include cities in Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharashtra, Odisha, NCR Delhi, Haryana, Rajasthan, Punjab, Uttarakhand, Himachal Pradesh, Uttar Pradesh and Madhya Pradesh.
For the quarter period ending 31st December, 2018, Heritage Foods achieved consolidated revenues of INR 16.8 crore, and Nara said that the company’s vision is to achieve a turnover of INR 6000 crore by FY 2022. “This would require a 20% to 25% growth rate,” she added. “We have undertaken various strategies to achieve this goal. This includes setting up a greenfield yoghurt plant by 2019 to improve the contribution from the VAP segment to 40% by 2022. Additionally, we want to increase our market presence by increasing our capacities in procurement, processing and packaging.”