Adulteration fears may spur premium dairy boom in urban markets

Companies such as Akshayakalpa Organic, Two Brothers Organic Farms, Sid’s Farm and Anveshan, which produce natural or organic milk, ghee and other milk products, stand to gain.

Banking on premium portfolios that include organic milk, A2 ghee, curd and yogurt, these companies are positioning themselves as credible alternatives to loose and mass-market dairy in urban markets, where the trust deficit around adulteration has persisted.

A2 dairy products contain only the A2 type of beta-casein protein, which makes it easier for the human body to process.

Their pitch, which includes traceable sourcing, controlled farm practices and minimal processing, is increasingly resonating with health-conscious middle-class households.

For Mumbai-based consultant Ananya, switching to organic dairy followed repeated concerns over milk purity.

“I started buying farm-branded milk after my daughter fell ill twice," she said, adding that the higher prices felt justified because of claims of transparent sourcing, consistent taste and direct access to farms that offered reassurance of quality.

Akshayakalpa, based in Tiptur in Karnataka, runs 2,700 farms and has ramped up efforts to control adulteration by introducing daily farm-level testing for antibiotics and toxins.

“There is a lot of consumer scepticism around quality. We have now opened up our farms for consumers to inspect and familiarize themselves," said Shashi Kumar, founder and chief executive officer of the company.

On Tuesday, India’s food safety regulator directed all states and Union Territories to launch an enforcement drive against adulterated milk and milk products, including paneer and khoya. This includes enhanced inspections and testing across the dairy value chain, triggering heightened consumer scrutiny around purity and sourcing.

The Food Safety and Standards Authority of India suspended Dindigul-based AR Dairy’s licence for ghee over adulteration and false information in August, Mint reported.

Investor interest

The developments have coincided with heightened investor interest in organic and natural food businesses. Over the past year, several farm-led dairy and staples brands have raised growth capital to expand capacity, strengthen cold-chain logistics and widen their direct-to-consumer and modern retail presence.

In October, Two Brothers Organic Farms, which sells A2 cultured ghee, khapli atta, peanut butter, honey, pickles and cold-pressed oils, raised ₹110 crore in a Series B funding round led by 360 ONE Asset, Rainmatter Investments, the Narotam Sekhsaria Family Office and Rahul Garg of Ignite Growth LLP.

Organic food brand Nourish You secured almost $2 million led by SIDBI Venture Capital in March, while Akshayakalpa is said to be in talks to raise ₹350 crore from Temasek’s ABC Impact and others.

Earlier this year, health food brand Anveshan, based in Gurugram, raised ₹48 crore in a Series A funding round led by Wipro Consumer Care Ventures. It will use the capital to expand its manufacturing capabilities and widen its overseas reach.

These premium product companies still have a small presence in the market. Anveshan posted revenue ₹58.2 crore in FY24 and Akshayakalpa’s revenue was ₹285 crore in that year, according to Tracxn. Revenue at Two Brothers Organic Farms was ₹108 crore in FY25, according to Entrackr.

The domestic dairy industry was valued at about ₹19 trillion in 2024 and is projected to expand to ₹57 trillion by 2033, according to the IMARC Group, a global market research firm.

India's organic food market (domestic and exports) is currently estimated at ₹10,000 crore in size. According to a September note by Worldpanel by Numerator (formerly Kantar), health-oriented foods and beverages now represent ₹63,093 crore in value, having grown at 11.7% compounded annually over the past four years.

Incumbent companies are taking note, too. In January 2024, Tata Consumer Products Ltd acquired Organic India for an estimated ₹1,900 crore to create a ‘health and wellness platform.’

In April 2025, ITC Ltd acquired Sresta Natural Bioproducts Pvt. Ltd, which sells organic foods under the 24 Mantra Organic brand, for ₹472 crore. The company said at the time the category had high growth potential, given the low penetration levels and growing consumer preference for natural and organic foods.

Akshali Shah, executive director of Pune-based Parag Milk Foods, which launched its premium milk, Pride of Cows, in 2011, is expanding its presence across the top metros. The brand sells milk priced at ₹120 per litre. Shah said premium dairy, a steadily growing segment for the company, is no longer a niche trend; it reflects a fundamental shift in how Indian consumers think about food and nutrition.

“...The target consumer is a well-informed, quality-conscious individual or family that prioritises health, nutrition, and provenance. These are consumers who read labels, ask questions, and are willing to pay a premium for products that offer genuine differentiation, transparency, and trust," she said. “Typically, they are urban professionals, young parents, and households that see food as an investment in long-term well-being rather than a mere daily necessity."

Price premium

However, the portfolio of organic and natural products comes at a huge price premium. Two Brothers sells one litre of A2 Gir Cow-Cultured Ghee for ₹3,370, while Akshayakalpa prices its one-litre ghee bottle at ₹1,429. In contrast, a litre of Amul ghee costs ₹650.

Sumit Keshan, managing partner at Wipro Consumer Care Ventures, said there is a market for these price points in India.

“You have to build on trust and some of it gets built over a period of time," Keshan said. “Cold pressed oil, for instance, is a big thing—double the price of regular oil but healthwise, it’s a different level. If you have a certain offering and quality, repeat purchases are very high. There is a market price point of ₹1,800-2,000 a litre for ghee, for oils, it’s ₹370-360. Clearly, for some consumers, health comes first. Not everyone can afford it."

These companies are increasingly doubling down on deeper farm engagement and investing in long-term relationships with dairy farmers, on-ground veterinary support and feed control, while tightening cold-chain and processing infrastructure. The strategy is aimed at ensuring traceability, consistent quality and supply reliability as they scale premium dairy in urban markets.

Akshayakalpa’s premium pricing will aid its expansion plans. It is looking to set up new farming clusters closer to its biggest markets, minimizing the transportation of milk and other products that have a shorter shelf life.

“We are also keeping farmer profitability in mind. The cost of producing milk is rising and farmers need to be compensated much better than the industry standards," Kumar noted.

Farmers and customers

Two Brothers’ Organic Farms, located near Pune, will continue to invest in technology that supports farmers and also extends to consumers by offering traceability, co-founder Satyajit Hange said.

“When you scan the product, you get dynamic traceability for that specific item—details about the farmer, methods used from sowing to harvest, irrigation practices, pest management, and more. It has taken us three to four years to build this system," he said.

Hange noted that it is also working on expanding its presence abroad, with the US and the UAE already accounting for about 20% of its overall business.

“Our prices are premium compared to the broader market, but the idea is that with scale, we can transfer those savings to consumers and bring prices down. There are also some categories where we are experimenting with more aggressive pricing, such as cold-pressed oils and jaggery powder," Hange said. “Pricing at around ₹120 per 500 grams (for jaggery) is very competitive because we have our own manufacturing units and our own farms. With scale, the intention is clearly to pass on efficiencies to consumers and reduce prices over time."