Good morning [%first_name |Dear Reader%],

Britannia Industries Ltd, India’s largest biscuit maker, has had a stellar run in recent years.

Its market share has consistently inched up over the past decade. And its shares have doubled in value in the past five years. In the same period, the Nifty FMCG (fast-moving consumer goods) index has only risen 70%.

With a market capitalisation of Rs 1.11 lakh crore (US$13.4 billion), Britannia is now India’s fourth-most-valuable FMCG company.

Clearly, things are going swimmingly for the Wadia group firm. Does it really matter, then, that it has struggled to make a dent in the dairy business?

I’m going to say it does, because Britannia has been trying to do that for, not five, not 10, but 25 years. More importantly, it’s in no mood to give up. Even if dairy is one of the most cut-throat corners of the FMCG world.

Britannia’s never-ending search for dairy riches

Dairy is not much more than a rounding error in the 104-year-old company’s topline. Britannia’s revenue in the year ended March 2022 was nearly Rs 14,000 crore (US$1.7 billion), and just Rs 500 crore (US$60 million) of that came from dairy.

Britannia offers its customers the whole gamut of dairy products, including milk, butter, dairy whitener, and curd. But cheese accounts for half of its dairy sales. So it came as no surprise when the company chose to sell 49% in Britannia Dairy Pvt Ltd, a subsidiary, to French cheese maker Bel SA in November last year.

Cheese, incidentally, was among the first products Britannia launched when it decided to take a crack at dairy in 1997, besides milk and whiteners. Five years later, the company, which was then partly owned by global dairy major Danone SA, moved its dairy business to a joint venture with New Zealand’s Fonterra Co-operative Group.

But Britannia had little success in products other than cheese, which forced it to stop selling milk in 2004. But then, about five years after that, it changed its mind.

Now, India may be the world’s largest milk producer, but its dairy market is notoriously difficult for new entrants. The co-operative brand Amul controls one-third of the country’s fresh-milk market, half of its cheese industry, and more than four-fifths of its butter market.

In addition to Amul, there are a bunch of regional co-operative brands, such as Aavin and Nandini in the southern states, and private companies like Parag Milk Foods Ltd and Prabhat Dairy Ltd. And it’s not just the number of players in the fray; it’s also the complexities inherent to the dairy supply chain.

You need to convince thousands of farmers to send milk to your strategically located collection centres, from where it reaches one or more of your factories.