homebusiness Newscompanies NewsDodla Dairy MD outlines plan to defend market share as competition grows
Dodla Dairy MD outlines plan to defend market share as competition grows
In an interview with CNBC-TV18, Sunil Reddy Dodla, MD, Dodla Dairy, said “All dairy companies, including Amul, will fight for the market share.”
Hyderabad-based Dodla Dairy's stock price has doubled over the past year. The company's profit for the first nine months of the current year (9MFY24) nearly matches the total profit of the entire previous year (FY23). The company has also achieved the highest procurement at 17.5 lk litre per day in the third quarter.
The milk and milk products company expects profit growth to continue at a strong pace for at least the next 12-18 months. It expects revenue growth of 10-12% in the fourth quarter this year (Q4FY24) and FY25 with margin of around 9-10%.
However, the increasing competition within the industry could play spoilsport. The company's closest competitor, Amul, which recently completed 50 years, indicated its strategy to aggressively retain market share even if it is at the cost of profit.
There is also the rising threat of cheaper substitutes for dairy products such as cheese, butter, curd, etc.
Dodla Dairy currently has a market share of around 7.5%, while all private players together hold around 50% share.
In a conversation with CNBC-TV18, Sunil Reddy Dodla, the company's Managing Director shared his thoughts on the challenges ahead for the business and how Dodla will counter them.
“We are beginning to see consolidation happening among companies. That is where it is going to lead. Amul is going to be aggressively fighting for its market share, we will be fighting for our market share and because of the consolidation, the smaller players will be weeded out,” he said.
Sunil Dodla pointed out two strategies through which they can safeguard against losing market to cheaper products. The first is communication. "We have to make sure we communicate to the consumer that we are better than the alternatives," he said.
Dodla Dairy has already charted out a plan to raise its advertising spend to 1-1.2%of sales from 0.4%. The company also aired television commercials for the first time in Q3.
The second is to invest more in value added products, he said. Dodla has been steadily increasing the share of value added products such as flavoured milk, milk-based sweets etc. in its portfolio.
In the third quarter (Q3FY24), value added products contributed 25.6% of overall sales versus 23.1% in the same quarter last year. For the 9MFY24, the contribution was at 28%.
The current market capitalisation of the company is ₹5,977.53 crore.
For more, watch the accompanying video
(Edited by : Shweta Mungre)
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