New Delhi: Nestle India Ltd, Yakult Danone India Pvt. Ltd, National Dairy Development Board (NDDB), and Gujarat Cooperative Milk Marketing Federation (GCMMF) are all engaged in a high-decibel campaign to claim first-mover advantage in the probiotic dairy products space.

Nestle India Ltd launched a probiotic yoghurt last week; GCMMF, that sells products under the Amul brand said it already had one such, and that it planned several more launches; NDDB announced its plans for a probiotic yoghurt the same day Nestle did; and Yakult Danone reminded everyone that it had announced its probiotic range almost two months ago.

Probiotics are dietary supplements with beneficial bacteria or yeast. Going probiotic is a natural progression for companies in the milk products business, says Jayen Mehta, assistant general manager, GCMMF. “Whether these products will last is the question,” he adds.

The dairy business in India is dominated by cooperatives and several multinational companies (MNC) have tried their hand at it without much success. “Britannia entered and exited the Indian market in the late 1990s. This was simply because of logistical problems,” says Sharad Gupta, editor, Dairy India Yearbook 2007, a trade journal.

According to Dairy India 2007, of the total milk produced in India (valued at around Rs3 trillion), only around 20% finds its way to the organized sector. Of this 20%, half goes to cooperatives and government agencies. “Clearly, there is room for MNCs and other organized players to tap into this hugely unorganized market,” says Gupta.

Companies are willing to do that because a growing economy and changing customer requirements have increased demand for their products, and the emergence of organized retail chains means better availability of cold storage facilities.

“The market has improved because of the modern trade. Our spends on distribution and supply chain have gone up 50%,” says Mayank Trivedi, general manager (dairy division) Nestle India. Analysts also point out that consumers’ focus on healthier food options is also a reason for companies to get into areas such as probiotic yoghurt or milk. “Indian consumers are becoming more health-conscious. While they can make dahi (curd)and butter at home, they don’t mind paying some extra bucks for low-fat, skimmed or probiotic food,” says Rasna Pvt. Ltd chairman and managing director Piruz Khambatta.

Companies are pushing hard to make the best of changing conditions: Nestle is upgrading its existing manufacturing facilities at Moga (Punjab) and Samalkha (Haryana) and Yakult-Danone is setting up a manufacturing facility near Delhi. “Value-added products also help in securing better margins. Probiotics, in fact, a promising bet that the industry has taken,” says Khambatta.

priyanka.m@livemint.com