Value-Added Products Will Help Dairy Sector Increase Sales 11-12% in FY23, Report Says



According to a Crisil NSE 1.28% Ratings report, revenue growth for the organized dairy sector this fiscal year will be one notch lower than the 13% increase in the previous fiscal year.








Value-Added Products Will Help Dairy Sector Increase Sales 11-12% in FY23, Report Says





According to research, India’s organized dairy sector is expected to increase its revenue by 11-12% this fiscal year, marking the second consecutive year of double-digit growth, due to strong demand for value-added products (VAPs) .












Even if milk sales remain stable and the full year benefit of the retail price increases introduced in the last fiscal year is recognized, this revenue gain will be driven by solid VAP demand (28% of overall sales ), did he declare.

According to the report, the demand for ice cream, curd and flavored milk is expected to rebound strongly within the VAP.

Dairies’ spending plans will be revived thanks to improved operational performance as well as well-managed balance sheets and better control of working capital, while their credit outlook remains stable.

Due to unusually warm weather, we expect the demand for ice cream, curd and flavored milk to peak this summer.












According to Aditya Jhaver, director of Crisil Ratings, this, combined with stable growth in the market for products focused on household consumption such as ghee and paneer, a strong recovery in the HoReCa segment (hotels, restaurants and cafes) and increases in price over fiscal precedent, will drive VAP revenue growth of 13-14% this fiscal year.

According to the report, milk sales, on the other hand, are expected to climb 9-10% this fiscal year, thanks to the full-year effect of two price increases last year, although volumes remain stable.

Dairies raised milk prices by Rs 2 per liter between June 2021 and February 2022, resulting in a 4-5% increase in average year-on-year realization this financial year.












Inflationary pressures on freight and packaging costs will also reduce operating profitability to 5% this fiscal year from 5.3% last year. According to the analysis, incremental increases in retail prices will help dampen operating profitability.











First published: May 27, 2022, 11:26 a.m. IST




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Rozella J. Cook