Have Surplus Milk? Make Butter Cookies
An employee inspects biscuits on a conveyor belt. (Photographer: Chris Warde-Jones/Bloomberg News)

Have Surplus Milk? Make Butter Cookies

When you have surplus milk, make butter—and then bake butter cookies. At least, India's largest dairy brand is doing so.

The world's strictest lockdown to contain the Covid-19 virus forced 1.3 billion Indians to stay indoors, disrupting the economy. Hotels, restaurants and cafes, a big contributor of demand for dairies, remained shut for more than three months. But milk supply in the world's biggest producer of the dairy raw material stayed intact.

Dairies usually convert surplus milk into skimmed milk powder. But the demand collapsed like never before this year. Amul, India's No. 1 dairy brand, and state-owned Mother Dairy are now churning excess milk into more butter, cheese and mawa. To exhaust the supply of these dairy products, they are also making cookies, bread, and rusks, gulab jamun, rasgulla and more.

“Both companies were impacted during the lockdown as most people weren’t stepping out,” said Devangshu Dutta, chief executive officer of Third Eyesight, a consulting firm. “Small business which sell their products were also impacted.” Both the dairy firms have shown nimbleness by expanding into other product categories, he said.

Amul, owned by the Gujarat Co-operative Milk Marketing Federation, launched 33 products in the April-June quarter, the highest ever, as institutional demand took a hit during the lockdown, said RS Sodhi, managing director of GCMMF. Prior to the pandemic, 30% of its revenue came from selling dairy products to hotels and restaurants. That has come down to 2%.

The owner of namesake butter brand didn't cut procurement of milk from farmers, said Sodhi but is converting it into white butter and skimmed milk powder as these have a higher shelf life. Part of this excess milk procured is going into its new launches.

Amul’s butter cookie. (Source: Amul’s Twitter account)
Amul’s butter cookie. (Source: Amul’s Twitter account)

Amul entered the butter cookies category as the shortening comprises nearly a fourth of the raw material needed, according to Sodhi. Another reason for launching multiple products during the lockdown was because in-home consumption increased, he said, and consumers opted for branded products.

Demand for cookies, breads and rusks spiked during the lockdown as in-home consumption rose. Even Britannia Industries Ltd., the maker of Good Day biscuits, acknowledged that.

The market for bread, according to Euromonitor International, is expected to grow by more than 10% over two years to $1.84 billion in 2022. And a prolonged confinement at home has led to customers preferring packaged sweet products like chocolates and cookies in the upcoming festive season to avoid contamination, said Crisil Research.

Mother Dairy, managed by the National Dairy Development Board, also plans to sell whole-wheat and multigrain breads, fruit buns and kulchas—Indian leavened flatbread. All use butter.

Like Amul, Mother Dairy continued to procure milk from farmers despite a fall in institutional sales. As a practice, excess milk is used in dairy products or converted into products for future usage, according to an emailed response by its spokesperson.

Demand for Mother Dairy's haldi (turmeric) milk and sweets spiked during the lockdown.

The company strengthened its portfolio of sweets comprising milk cake and orange mawa barfi by adding frozen rasmalai, gulab jamun and rasagulla during the lockdown period, Sanjay Sharma, business head of dairy products at Mother Dairy Fruit & Vegetable Pvt., told BloombergQuint in an emailed response. “With sweets, we realised consumers are gradually moving towards packaged food as they’re safer compared to loose (unpackaged) products available in the market.”

In the first phase of the launch of bread range, the company is targeting all 1,800 exclusive Mother Dairy outlets in Delhi-National Capital Region, Sharma said, adding it has expanded its sales infrastructure. "We plan to make the product available at 25,000 outlets and other retail shops in Delhi-NCR.”

Amul, meanwhile, has priced its butter bread slightly higher than competition during test marketing in some cities of Gujarat. Sodhi said it's targeting the premium market.

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