India
and the Milky Way
Henrik
Hauggaard took charge as Managing Director of Tetra Pak India at the
turn of the year after a long stint in Indonesia and senior appointments
in Southeast Asia. In his first tête-à-tête with the press after taking
charge, he looks at the Indian market with wisdom from the past.
After
being the largest producer of milk, what is the way forward for India?
There
has been growth in milk production. But consumption and milk processing
are not as developed as they could be.
We
have two global trends in the milk market – health and food safety.
A consumer has the basic right to demand healthy food. I was particularly
happy to see China implementing HACCP (Hazard Analysis and Critical
Control Points) practices. Today malpractices abound in India. That’s
cheating the consumers and the Government.
What
is the way out? Given that more than three quarters of milk production
comes from the unorganised sector, can the sector be regulated?
It
can be regulated. There should be proper punishments in place. In the
Consumer Protection Act, the link should be taken back to the manufacturer.
But the Government can’t police.
A
bigger step would be lowering the barriers to milk processing machinery
imports. If the Government does this, good technology can be brought
in, ultimately leading to safe products. That would also lead to industry
consolidation.
At
the seminar, you talked about the need to lower fiscal barriers. Are
these the ones you are referring to?
We
need to work on both fiscal barriers and consumer protection law. A
large part of the retail sector is underdeveloped. If that comes up
in a better way, the consumers will have a wider choice. Now, they either
have a limited choice, or none at all. That would improve quality and
drive domestic policy.
Is
the Indian market too price-conscious?
Consumers
are extremely price-sensitive. There are few consumers that see the
clear price-value link. The industry has to design one and then communicate
its relevance to the consumers who obviously go for the lowest price.
Today the market is still very price-driven. That will change in the
future. Consumer education is needed.
What
is the engine of growth for the Chinese industry? What is the learning
from Indonesia?
The
markets are very different. The retail revolution in China is its driving
growth. Only a small part is being exported.
Indonesia
is reliant on imports, as only a third of the total demand is met by
domestic production. But the milk processing industry is developed.
The market is also tremendously segmented – you have milk for every
single consumption occasion.
There
are so many small producers in India too. None of these can invest in
branding, R&D, product development. Had there been fewer but larger
players, it would have helped. The future would depend on the National
Dairy Development Board developing a strong processing industry.
Worldwide,
about 65 per cent of Tetra Pak’s business is still milk-oriented. Do
you see a shift away from this in India?
I
foresee a strong growth in beverages – more high-value products like
juices, soya and coffee drinks. Soya milk could be important, given
that the taste is right. Possibly if someone positioned soya as a ‘veg’
product, it would help.
