Dairies Ramp Up Production As Indians Develop A Taste For Cheese

The Rs 2,900-crore Indian cheese market is growing at an annualised rate of 13 percent.

Adam Elbaz prepares a cheese pizza at “A Slice of New York” pizzeria in New York (Photographer: Daniel Acker/ Bloomberg News. ) 
Adam Elbaz prepares a cheese pizza at “A Slice of New York” pizzeria in New York (Photographer: Daniel Acker/ Bloomberg News. ) 

Indians are not known to be big cheese eaters. The little they consume is on pizzas. Or as the vegetarian equivalent of butter chicken and chicken tikka—cubes of paneer dipped in curries or roasted on a grill.

That’s slowly changing as demand for mostly the processed varieties like mozzarella grows in the world’s biggest milk producing and consuming country. Moms in cities now pack grilled cheese sandwiches for schoolkids and cafes sprinkle handfuls on instant noodles. Even street vendors grate a decent helping on a dosa.

Swamy Gowda, who runs a roadside food stall in Lower Parel, Mumbai, uses at least four kilograms every day. “More than three-fourths of my customers opt for cheese in their sandwiches and dosas.”

Cheese (excluding paneer or cottage cheese which is a separate category) contributes just 1 percent to the dairy consumption in India, according to a report by Edelweiss Securities. That compares with 36 percent in the biggest-consuming region—Europe. Yet, the Rs 2,900-crore market, according to Euromonitor International, is growing at an annualised rate of 13 percent. That’s second only to yogurt, a traditional Indian favourite.

As consumption patterns change on rising incomes, Indian dairy products makers are stepping up to cater to the demand. Amul, the nation’s largest dairy with a 40 percent share in the cheese market, tripled its capacity in the last two years. The milk cooperative plans to double it further in the next two years. That’s part of its $200 million (almost Rs 1,300 crore) capex.

Increasing urbanisation is changing consumption as people upgrade from a cereal or carb diet to protein-rich foods, RS Sodhi, managing director Gujarat Co-operative Milk Marketing Federation Ltd., the maker of Amul-branded products, told BloombergQuint.

People aspire to consume more value-added dairy products.
R S Sodhi, Managing Director, Amul

Fast-food chains like McDonald’s, Pizza Hut and Domino’s are also driving the demand for processed, cheddar and mozzarella cheese. Not surprising that Amul is also betting on hotels, restaurants and caterers to boost the demand for value-added products in Asia’s third-largest economy.

Its peer Parag Milk Food, India’s second-largest cheese maker that sells Go-branded products, too has seen demand grow from hotels-restaurants and retail stores alike. It sells cheese in 75 different pack sizes and flavours.

“Our focus is on growing the cheese business,” Devendra Shah, chairman of Parag Milk Foods, told BloombergQuint. The company will add capacity in line with demand. Since its stock market debut in May last year, he said, the dairy increased its capacity from 40 tonnes a day to 60.

Different kinds of cheese placed for a photograph. (Photographer: Jason Alden/Bloomberg) 
Different kinds of cheese placed for a photograph. (Photographer: Jason Alden/Bloomberg) 

Brie, Fetta And More On The Table

As processed cheese consumption grows, there’s also a tiny market for cured and fresh cheese, especially among urban consumers. From mascarpone, ricotta and cream cheese to fetta, parmesan and brie, hypermarkets and local retail stores are stocking up on different varieties.

Dairy Craft, a maker of a gourmet cheese, said demand is increasing by 25 percent every year. That’s largely driven by hotels and cafes. Even the retail consumption is growing at a fast pace, though on a lower base.

“With more women working in big cities, they tend to either shop at modern retail outlets, or online, where gourmet cheese is sold,” said Isha Juneja, head of strategy and business development at Dairy Craft. “Hence, the demand from retail consumers is growing.”

Fortune Gourmet Specialities Pvt. Ltd., Himalayan Products, Acres Wild, ABC Farms, Exito Gourmet and La Ferme Cheese are some other makers of cured cheeses.

Even Amul now makes sour cream, gouda and emmental. The dairy maker has gone a step further with its ready-to-cook snacks – Amul cheese nuggets and cheese onion pockets.