Jump to content

Search the Community

Showing results for tags 'Marketing'.

  • Search By Tags

    Type tags separated by commas.
  • Search By Author

Content Type


Forums

  • Indian Cricket Fans
    • Cricket Talk
    • IPL Forum
    • Chit Chat
    • Cricket Videos
    • Other Sports
  • Virat Kohli Fan Club's Threads
  • ICF Fantasy Cricket Club's Updates
  • genuine fast bowling fan club's most lethal fast bowler ever
  • Saini Hate Club's Saini Poor Bowling Tracker

Find results in...

Find results that contain...


Date Created

  • Start

    End


Last Updated

  • Start

    End


Filter by number of...

Joined

  • Start

    End


Group


AIM


MSN


Website URL


ICQ


Yahoo


Jabber


Skype


Location


Interests


Blogs


Biography


Location


Interests


Occupation

Found 1 result

  1. The dodgy science behind India’s US$300 million A2 milk industry Maitri Porecha, 22 Jun 2022 Customers who sign up for A2 milk pay a hefty premium for the promise of pure, farm fresh, and organic milk Of 50 startups that operate in the space, only nine display any kind of transparency regarding DNA certification or purity tests Domestic-bred cows that give A2 milk produce lower yields at five to six litres a day, compared with crossbreeds that give 10-12 litres Lack of regulatory standards is hurting consumer sentiments, as assurance of quality and value for money is little in this free-for-all business In late January, Pune-based organic foods and dairy company Humpy Farms shot to fame after raising Rs 1 crore (US$128,000) on the reality television show Shark Tank India. Its founders sold a 15% stake at a valuation of Rs 6.67 crore (US$850,000) to three “sharks”—Peyush Bansal, co-founder of eyewear retail chain Lenskart; Ghazal Alagh, co-founder of skincare brand Mamaearth; and Vineeta Singh, co-founder of SUGAR Cosmetics. While Humpy Farms sells products like organic fruits, rice, millets, and flour, 80% of its sales comes from dairy products, its founders said during their pitch on the show. They also drew the sharks’ attention to how their dairy products are made from what is known as A2 milk. A2 is a variant of beta-casein, the largest protein found in milk. While all cows originally produced only A2 milk, genetic mutation over the years led to many starting to produce another variant called A1 as well. Since about 2015, 50-odd startups and small-sized dairy companies have cropped up in India, mostly in tier 1-2 cities, claiming to sell certified A2 milk. These companies claim that A2 milk is easier to digest and is better suited for people with diabetes, heart disease, and lactose intolerance. However, there is “next to no scientific evidence” to show that A2 milk has superior health benefits compared with regular milk, said a researcher from India’s National Dairy Research Institute (NDRI). The researcher and some other sources have been anonymised in this story at their request—they were either not authorised to speak with the media or did not want to be seen commenting on a peer company. Indian consumers, though, seem to have bought into the hype. According to market research by beverage brand Hugg Beverages, Indians are ready to pay anywhere from 2-4X the price of regular milk for A2 milk. A litre of cow’s milk from the Mother Dairy brand, for instance, sells for Rs 50 (US$0.6). Ghaziabad-based Hetha Organics prices its A2 milk at Rs 180 (US$2.3) per litre. Hetha’s ghee (clarified butter), derived from A2 milk, is sold at Rs 5,000 (US$65) per litre, up to 10X the cost of regular ghee. “The market-led euphoria for Indian cow breeds like Gir [which are known to produce A2 milk] is so heady that prices for a cow of a very good bloodline have jumped from Rs 35,000 (US$450) per animal to up to Rs 1.5 lakh (US$1,900) over the past few years,” said an executive from DeLaval, a Swedish company that manufactures dairy and farming machinery, and works with Indian farmers on the ground. Home bred India is home to nearly 50 breeds of indigenous cows of which Gir, Sahiwal and Tharparkar among others are popular for milking It’s not just small startups that were hooked by the A2 milk fad. India’s largest dairy brand Amul has been selling A2 cow milk since 2016. However, Amul’s managing director Rupinder Singh Sodhi told The Ken that selling A2 milk for a premium is a “marketing gimmick”. “Majority of the milk that we sell at Amul, upto 58%, is buffalo milk,” he said. “All buffalo milk, by default, is purely A2. Another 20-22% milk is sourced from local cow breeds and, hence, is A2. The remaining 20% of the milk is derived from crossbred cattle, 50% of which is A2 in nature. Ghee is 99.99% fat, there is no role of A1 or A2 protein component in the product by its very nature.” The A2 milk industry in India, which is the world’s largest milk producer, is estimated to be worth just over US$300 million. But Indian A2 milk companies are operating in a regulatory grey area. The Food Standards and Safety Authority of India (FSSAI) does not distinguish between A1 and A2 milk. Only nine of the 50-odd companies publicly upload DNA test certification documents to support their claim of selling A2 milk. “Misbranding [of A2 milk] is currently not being reported as a big enough problem,” said Ashwin Bhadri, a food safety expert and founder of Equinox Labs, a food, water, and air testing laboratory. And while the dairy business is all about pumping up volumes to pave the way to profitability, smaller A2 milk companies like Kubauli Milk and Humpy Farms are struggling, despite their premium pricing. Hefty overheads for marketing and freight costs leave them earning wafer-thin net margins. Humpy Farms founder Jaywant Patil said on Shark Tank India that his company’s net margin was 1%, on revenue of Rs 2.5 crore (US$320,000) in the year ended March 2021. In comparison, Hyderabad-based Dodla Dairy’s net margin in the year ended March 2022 was ~6%, on revenue of Rs 2,243 crore (US$287 million). There’s only a certain extent to which companies can squeeze this A2 cow juice fad. Explore more infographics like this in The Ken - Visual Stories Shaky science Branding milk as A2 is nothing short of a scam, said a senior executive at Navi Mumbai-based dairy company Kubauli Agro, which sells A2 cow milk and ghee. The company recorded revenue of over Rs 25 crore (US$3.2 million) in the year ended March 2022. The senior executive said that A2-branded milk can be traced back to The a2 Milk Company in New Zealand. It was set up in 2000 by scientist and entrepreneur Corran McLachlan. Today, it’s present in markets like Australia, China, and North America. It has a market capitalisation of NZ$ 3.4 billion (US$2.1 billion). Bedfellows The a2 Milk Company is one of the most prominent sponsors of reality television show MasterChef Australia. The partnership has existed since 2019 In 2009, though, the European Food Safety Authority came down hard on the marketing hype around A2 milk. It declared that it found no relationship between drinking A1 milk and the occurrence of diabetes, heart disease, and autism. The marketing narrative then shifted to claims that A2 milk is more easily digestible than A1 milk, and is better for lactose-intolerant people, said Silpa Reddy, founder of Hyderabad-based dairy brand Honest Milk Co. However, these claims are based on studies conducted on rats, she added. “The human clinical studies conducted to date (only two with roughly 42 participants each) do not provide substantial evidence of any benefit of A2 milk. If you’re lactose intolerant, you’re allergic to the sugar component of milk; it doesn’t matter if it’s A1 or A2.” The Ken was not able to independently verify the part about the human tests. A2 milk companies function in two ways: they either buy land and breed their own cattle to control their mating and diets, or they aggregate A2 milk from suppliers and sell it under their own brand. Whichever the route, The Ken found that not all A2 milk companies take DNA certification of their cattle seriously. Because it’s not really cheap. “A DNA test would cost between Rs 5,000-7,000 (US$60-90) per animal,” said the NDRI researcher quoted earlier. Dairy farms with, say, 100 cows would have to pay Rs 5-7 lakh (US$6,000-9,000) for the test. “Without running a DNA test on the blood sample of the cow, it’s impossible to definitively claim that she is a pure A2 or A2-bred species.” Another way to ascertain the purity of the milk would be by testing it for the A2 variant of the beta-casein protein. According to Bhadri, the costs of testing a batch of milk can vary from Rs 500 (US$6) to Rs 4,000 (US$50). Explore more infographics like this in The Ken - Visual Stories A loss-making proposition The problem with such high costs is that they take away from the attractiveness of the dairy business, which is a pure volume game. The higher the volume of milk produced and sold, the more is the possibility of drawing profits. Dodla Dairy, for instance, procures, processes, and distributes hundreds of thousands of litres of milk each day, according to founder and managing director Sunil Dodla. The company posted a profit of Rs 133 crore (US$17 million) in the year ended March 2022. Large companies like Dodla, Amul, and Mother Dairy have cracked the dairy formula by adding a smattering of diversified products like ghee, chocolates, ice cream, curd, paneer (cottage cheese), and flavoured yoghurt. And they’ve managed to balance profits with pricing. For smaller A2 milk companies, though, milk and ghee is priced exorbitantly, and rates wildly vary from brand to brand. The high pricing has more to do with making economic sense of running a business on lower volumes, rather than the science behind A2 milk. Let’s take the example of Humpy Farms. Its three founders—Patil, Malvika Gaekwad, and Vishal Chaudhari—invested nearly Rs 8 crore (~US$1 million) to set up the company five years ago. Humpy Farms now extracts 5,000 litres of A2 milk daily from a Pune-based local pastoralist family that it supports on its farmland. The company purchases the milk from the family at Rs 45 (US$0.6) per litre. Processing and packaging costs push this up to nearly Rs 70 (US$0.9) per litre. Add to this another Rs 13-18 (US$0.17-0.23) per litre in delivery costs. “We sell our milk at Rs 89-99 (US$1.1-1.2) per litre on a subscription-based loyalty offering,” said a senior executive at the company. “There are overheads like marketing, warehouse and office rents, electricity, and support costs. Wrong investments in IT, a failed rebranding exercise, which never saw the light of the day, and marketing spends suck away at the heart of the business. We have hardly been breaking even lately.” Humpy Farms did not participate in the story. One of the reasons why selling A2 milk is a costly business is because domestic cow breeds like Gir and Sahiwal, which produce it, do not yield more than five to six litres of milk per day. On the other hand, crossbreeds like Jersey and Holstein, which produce the A1 variety, yield 15-20 litres a day. As a result, most companies that brand themselves as A2 also diversify into selling milk from crossbred cows under the label of farm fresh. They simply cannot sustain their business solely on A2 milk. “Labelling the milk A2 is the process of creating a unique branding niche—an addiction of sorts with consumers—and then using the goodwill to sell other categories,” said the senior Humpy Farms executive. “It’s extremely difficult to scale up with just A2 milk.” The regulation conundrum Due to these challenges, A2 milk startups have no choice but to ace the marketing game. In their communications, the startups portray that they have end-to-end control over how their cows are fed, that they discourage artificial insemination, and cows that catch common infections like mastitis are separated at the source before milking them. They also claim that hormonal injections like oxytocin are not used to increase milk yield. That said, the companies are also divided over practices like artificial insemination and method of milking—whether by hand or via pumps. Kubauli Agro, for instance, practises artificial insemination, said founder Maninder Kumar. Since FSSAI does not have any standards for A2 milk, there’s no bar on which company can claim the A2 tag. Meanwhile, the Honest Milk Co’s Reddy also found fault with the A2 milk companies’ claims that oxytocin given to cows seeps into their milk. “The oxytocin molecule is too large to cross the blood-to-milk barrier,” she said, adding that milking the cow via a pump is gentler on the animal and also prudent from a hygiene point of view. Where A2 milk startups have an advantage over large dairy companies is the freshness of milk. Since they produce smaller batches, they can deliver fresher milk to customers, said the DeLaval executive quoted earlier. Moreover, incidences of sub-clinical mastitis, a bacterial infection in cows, can also be better controlled in smaller farms, but only if adequate checks and balances are in place. “Such cases are difficult to detect and affect 20-50% of cows in a given herd. Larger companies do not have visibility at the farm level of the kind of milk that is trickling into their collection centres,” the executive added. However, while A2 milk startups claim to have the best of intentions to supply “pure” milk every morning to their customers’ doorstep, they end up “villainising” regional co-operative brands in the process, said Reddy. Bigger companies like Dodla Dairy, for instance, have invested up to Rs 75 crore (US$9.6 million) to test milk samples for adulteration and chemicals at collection and chilling centres. “We run at least 30 tests [per day] to check whether the parameters of milk are up to the mark,” said Dodla. It’s a similar conundrum to the one faced by India’s organic foods industry, which has certification but there’s no regulatory body to enforce it upon sellers. There’s also no penalty for companies that wrongly use the organic label. Red Flag Consumers who buy A2 milk might be in for an unexpected fraud, warned Helmut Mayer, professor University of Natural Resources and Life Sciences at Vienna, Austria. He studied A1 and A2 beta-casein characteristics for his peer-reviewed study published in Food Research International in 2021 If anything, the convoluted narratives around A2 milk have shifted the focus on the need for awareness at the ground level. Farmers should be empowered at a large scale to feed healthy fodder to their cattle, said the DeLaval executive. “They should also be provided tools to tackle infections.” At the end of the day, only a handful of India’s over 53 million indigenous cows would be getting milched for premium milk segments, since the A2 milk market is still nascent. India’s overall dairy industry is worth Rs 13,17,400 crore (US$169 billion). The verdict on which company delivers pure A2 milk is precarious, as standardisation and control currently do not feature in FSSAI’s list of priorities related to food safety and consumer awareness. As for the consumers, there is currently no way to say that just because one is paying up to 4X more for a packet of A2 milk, they’re guaranteed purity or better health benefits. source: https://the-ken.com/story/the-dodgy-science-behind-indias-us300-million-a2-milk-industry/
×
×
  • Create New...