127 HERITAGE FOODS LTD | 32ND ANNUAL REPORT 2023-24 MDA STRATEGIC REVIEW STATUTORY REPORT FINANCIAL STATEMENTS Organic and sustainable farming influencing consumer choice Organic and sustainable food production methods are exerting a positive influence on the dairy food market. Consumers are increasingly drawn to products linked with health, environmental sustainability, and even animal welfare. The growing demand for organic dairy products is poised to create substantial opportunities for dairy producers worldwide. This consumer shift towards organic Cold chain developments boosting market prospects Advancements in sophisticated and technology-oriented cold chains play a pivotal role in the dairy food industry. These enhancements boost product freshness, safety and shelf life. With improved cold chain infrastructure, producers can expand their market presence, meet the demand for dairy products across various regions, adhere to food safety standards, and offer convenience to end-users. Focus on clean label products Key players in the dairy food market have been prioritizing innovation, especially in the realm of clean label products. Consumers increasingly favour food items with transparent ingredient lists, devoid of artificial and unwanted additives. Companies that adapt to meet these demands are poised to strengthen their market presence and capitalize on the demand drive towards these products, especially with consumers becoming more aware and conscious of ingredients used in making food products. The growth of the global dairy food market is likely to be reshaped not only by increasing consumer demand but also by strategic initiatives undertaken by the major industry players. As technology and sustainability take centerstage in consumer preferences, the market is poised for dynamic evolution that aligns with these core shifts. In the years ahead, the industry expects to witness the full impact of these trends, propelling it toward a projected valuation exceeding a trillion dollars. Indian dairy industry The Indian dairy sector, traditionally a vital part of the country’s agrarian economy, is undergoing significant transformation due to innovative government initiatives and consumer demand shifts. To meet growing consumer demand for dairy products, new policies and programs are being introduced, paving the way for expansion and sustainable growth. India leads in global dairy production and consumption, with dairy products playing a crucial role in Indian cuisine—whether consumed directly, in restaurants, or as packaged food products. Approximately 45% of Indian households’ food budget is allocated to dairy and packaged foods, driven by factors like population growth, changing lifestyles, rising incomes, and growing health consciousness. Valued at approximately `16,792.1 billion at the close of 2023, the Indian dairy sector presently commands a 25% share of the worldwide milk production, standing as the leader globally due to its substantial contributions in both the quantity and variety of dairy offerings. Supported by advantageous market dynamics and continuous operational transformation, the sector is projected to rise to a size of `49,953.5 billion by 2032, marking a CAGR growth of 13%. It is paradoxical that India, despite being the largest producer of dairy products in the world, has low per capita consumption compared to developed countries. As consumption rise, this suggests significant unlocking of growth potential in the future. The Indian dairy industry thus offers an attractive opportunity for investors to capitalise on the country’s rising discretionary consumption trend, across both its rural and urban markets. India dairy market size (` in trillion) (Source: Investec India, Research report on India Dairy Sector Milking the Rising Consumption Trend) Indian dairy industry is the single largest agricultural commodity and contributes 5% of the national economy and employs over 80 million farmers directly. The liquid milk segment accounts for approximately 61% of the overall national dairy market, with traditional value-added products making up 34% and emerging value-added products comprising the balance 5%.
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