iD Fresh's Dairy Revenue Dips Due To Persistent Milk Inflation

Packaged food maker iD Fresh Food (India) Pvt.'s dairy product sales have declined as rising prices to counter persistent milk inflation are driving away consumers."Sales of value-added dairy products like paneer, ghee and curd have plunged because of high prices," PC Musthafa, chief executive officer and co-founder at iD Fresh Food, told BQ Prime. But the Bengaluru-based maker of dairy products said it's not to blame for the increased price tag. "The reality is that we are forced to pass along our changes [hikes or cuts] to the consumers," Musthafa said. The company's dairy revenues have fallen 10% compared over the previous year.A surge in demand for dairy products amid an almost stagnant milk output in the past one year has led to tight supply and elevated prices. India, the world’s largest milk producer, contributed 24% of the total global milk output in 2021-22, with the production increasing 6.5% to 221 million tonnes over the previous year, according to the Food and Agriculture Organisation. But in 2022-23 it's expected to remain flat or grow slightly.At 10.33%, the wholesale inflation in milk in February marked a fresh high in recent times, according to data by the Ministry of Commerce, indicating there may be room for more retail price hikes in the months ahead. An intense summer coupled with heatwaves is expected to keep prices of dairy products elevated, at least until the next flush season. .Dairy Stocks Rally as Heatwaves Drive Rare Shortage in World’s Biggest Milk Producer."Milk prices are likely to remain firm going into the summer season due to tight demand-supply balance and fodder cost pressures,” the Reserve Bank of India governor Shaktikanta Das, had recently said.While iD Fresh Food may be grappling with cost pressures in its dairy products portfolio, the overall impact of inflation remains minimal, and the company has not hiked prices in other product categories.Founded in 2005, the company expanded its product line beyond idli and dosa batter to introduce filter coffee, packaged food items such as ready-to-cook parota and bread, and dairy products like paneer, curd and ghee.The batter segment accounts for 50% of the overall revenue of the company, followed by the parota at 33-34%.Within the dairy segment, the company said paneer accounts for 13% of sales and curd contributes 7%. The company expects to generate revenue of Rs 100 crore over the next three years in the ghee segment."The disruption in manufacturing of the dairy products coupled with low demand has hurt the growth of the dairy portfolio," said Musthafa.The brand, available in 35,000 retail outlets in 45 cities, is also expanding overseas. It gets "a couple of crores" in revenue from international markets like U.K. and U.S, said Musthafa. "We have just hired a new team last week to help us expand our reach in these markets."The company has also recently entered the Saudi Arabian market, which has already contributed about Rs 1.2 crore in less than a year of operation. Musthafa said iD Fresh Food has plans to expand to Qatar, Kuwait, Bahrain, and Singapore in FY24.The company has a manufacturing capacity of over 1 lakh kg per day and has production facilities in Karnataka, Bengaluru, Hyderabad, Mumbai, Delhi and Ajman (the UAE)."Within just a year of our foray in the Delhi market, we were able to garner Rs 2 crore revenue per month, the best-ever for iD Fresh in the last 15 years," according to Musthafa. This success motivated the brand to establish a factory in Delhi, which has been operational for the past six months and caters to the Chandigarh and Haryana markets.Two-thirds of the company's revenue comes from India, while the rest comes from the UAE and other international markets. Of this, quick commerce and e-commerce comprises one-third and the rest comes from modern trade and general trade.Delhi, for instance, is more of an e-commerce play, "but now we are looking to take our products in general trade, in a gradual manner. This year, we plan add 2,000 outlets," Musthafa said.For FY24, the company has allocated a capex of Rs 40-50 crore. A new plant will be established in Hyderabad at Rs 20 crore and the remainder will be utilised for automating and upgrading existing plants.iD Fresh Food also plans to launch three new products next month, Musthafa said without revealing the details.According to Musthafa, iD Fresh Food is targeting Rs 700 crore in sales in FY24, backed by global expansion and increased penetration in the country's general trade. In FY23, the company posted revenue of Rs 515 crore, rising from the previous year's Rs 383.5 crore.

iD Fresh's Dairy Revenue Dips Due To Persistent Milk Inflation

A surge in demand for dairy products amid stagnant milk output has led to tight supply and elevated prices.

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