Venturing into VADP

India's dairy industry is undergoing a constant transformation. Value Added Dairy Products (VADP) are gaining significant traction among the consumers, who are becoming increasingly conscious of their diet and health. Due to growing urbanization, increasing disposable income and health consciousness, the demand for convenient, nutritious and premium quality dairy products is increasing, evincing the interest of enterprising entrepreneurs to enter into the VADP segment of the dairy industry. Ashok Malkani views the market demand for the products and discusses the various aspects of the industry

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When one speaks of Dairy industry, one visualizes vast cow farms contributing to the country’s economy with a large production of milk. India, according to Statista, was the third largest producer of cow milk (with 99.5 million metric tons) in the world in 2024. The Indian dairy industry is not just milk it is also about milk products like butter, cheese, yoghurt, paneer (Indian cheese), ghee and an array of other products including sweets.

India, a land of diverse cultures and traditions, has innumerable festivals and celebrations, each of them being celebrated with different milk based sweets having different flavours which capture the essence of the festival. These too aid in promoting the VADP market. Some of sweetmeats in demand on various different festivals are: Barfi, Basundi, Cham Cham, Doodh Peda, Gulab Jamun, Kaju Katli, Kalakand, Kheer, Khoya, Malai Ghevar, Milk Cake, Mysore Pak

Pal Payasam, Paneer Jalebi, Peda, Rabri, Rasgulla, Rasmalai, Sandesh and Shrikhand.

There has, thus, been an increasing demand for value-added dairy products in the country. A recent report by CARE Ratings said, “Through the past decade, significant transformation took place in the Indian demographic space, which led to heightened consumer interest in VADPs (Value Added Dairy Products). This shift in the dynamics of the sector proved beneficial for manufacturers, as margins in the case of VADPs are more than double the margins in the liquid milk segment.” According to the report, while margins in the liquid milk space stood at four to five cent, those for VADPs ranged from 12 per cent to 18 per cent. It is estimated that the share of VADPs in the milk and milk derivatives segment is growing at about 25 per cent every year.