The unprecedented global pandemic that has swept the country now for the second year has immensely affected almost every aspect of life. With lockdown restrictions still in place, the retail industry and the supply chain has witnessed changes in demand and supply.
The consumers habit of mass buying and stocking up on essential items has not changed much from last year. However, what has changed is the demand for quality produce. There has been a substantial growth in demand for branded foods, especially in consumption of dairy products. This shift gave impetus to local and regional brands with local manufacturing units and distribution network.
Catering to the new consumer demands
Despite the challenges, one of the sectors in India that handled the pandemic well was the dairy industry, especially in terms of packed dairy products. What boosted the industry was that the Covid-19 pandemic dramatically affected consumers dietary habits. As the lockdown gave people the opportunity to rustle up dishes just like chefs do, the broadening culinary engagement pushed up consumption of dairy products.
With more and more people locked in their homes, consumers ended up spending extended hours in their kitchens. Thus, leading to a surge in household consumption of dairy products. Demand for categories such as cheese and paneer witnessed an especially greater demand due to their versatile nature. Not only is paneer delicious to taste but during the height of the lockdown, the internet was trending with unique, fun and easy to make paneer recipes.
Also, another factor that is aiding dairy product consumption, is the growing preference for nutritious vegetarian food. As Indians quite often see vegetarianism more as a good virtue rather than a life choice, the negativity of the pandemic and lockdown led people to opt to eat more paneer and other packaged dairy items as compared to non-vegetarian options. Hence, the Covid-19 pandemic and the ensuing focus on nutrition have boosted paneer sales.
Over the last 12 months and going forward, consumer behaviour will be different than it was pre-pandemic, and as that behaviour takes root, dairy products supply chains will need to adjust from farm to fork. Furthermore, the pandemic also ensured consumers stirred away from loosely available products and chose to consume more locally available or regional branded dairy products. This caused an accelerated shift in the supply chain and vastly prompted PM Modi’s vision of ‘Vocal for Local’.
Although the biggest component of India’s dairy market is liquid milk, seeing the demand for longer lasting value products, manufacturers converted the surplus milk into highly demanded value-added dairy products such as paneer, butter, cheese, ghee, and sweets, thus further boosting the dairy industry.
Most importantly, the global pandemic being a major health crisis, was the silver lining for the dairy industry. While other industries and sectors across India struggled, Indian consumers turned towards indulging in homemade comfort food. Consumer choices shifted to consuming products made from organic materials. This set manufacturers in the dairy sector to expand their product offerings.
The road ahead
As completely overcoming the pandemic remains uncertain, and the best option for survival being hygiene and health, people have realised that it’s important to improve one’s immunity. Hence, consumption of dairy based ingredients continues to be the favourable option for many.
Furthermore, Covid has brought about a shift in the buying pattern of consumers and many dairy players acknowledge food safety has fuelled a growing trend in consumer preference towards packaged and branded produce.
The outlook for the dairy sector in India continues to be positive on the back of government support, increasing population, per capita consumption, and expenditure on value-added products such as paneer, cheese and butter items.
In the long run, the domestic demand for value added products such as paneer will only continue to rise. Towards strengthening the value-added product market, Government may consider measures such as rationalisation of GST to build market resilience, giving further impetus to regional brands.
Moreover, the dairy industry, which was facing headwinds during the onset of the Covid-19 pandemic, has turned this crisis into an opportunity as the supply and consumption of value-added dairy products has risen and only continues to witness an upward trajectory.
(The author is managing director of Jayshri Gayatri Food Products)