Some startups are using daily doorstep delivery of dairy products as an entry point for larger FMCG push.
A slew of tech startups are working towards digitizing the dairy supply chain, improving milk quality and production.

Dairy startups such as Country Delight and Stellapps are leveraging technologies like internet of things (IoT) and data analytics to increase the production and quality of milk and expand value-added dairy offerings like cheese, butter, ghee leading to an increase in the productivity and income of farmers.

In India, a large quantum of dairy production remains unorganized.

According to analysts, the Indian dairy industry comprises 300 million herds of cattle spread across 75 million dairy farmers. These smallholder dairy farmers lack veterinary support, advice on cattle nutrition, access to optimal nutrition and animal health products, transparent markets for trading cattle and, in some cases, market access for their milk. At the same time, private dairies and dairy cooperatives struggle with sourcing milk, managing farmer payments, building traceable supply chains, and ensuring quality.

“In the coming years, you should expect to see various dairy-focused agritech startups tackling these problems and building a stronger future for India’s dairy ecosystem,” said Mark Kahn, managing partner, Omnivore, which has backed startups including Stellapps.

Bengaluru-based Stellapps uses IoT for efficient milk production, milk procurement and cold chain management. It assimilates this data on a cloud platform, analyses it and provides real time, actionable intelligence to all stakeholders via mobile devices.

During the covid lockdown, Stellapps witnessed a 46% spike month-on-month in its order value, as the number of farmers spiked from 1.98 million to 2.3 million across 30,000 villages in 18 states, 16.6% more than pre-covid times.

“There are 80 million households engaged in milk production of which about 60-70% are small and marginal farmers. Increasing the income of smallholder farmers which will lead to a better life for them has been a key agenda of the government and will play an important role in shaping the post-covid rural economy,” says Ranjith Mukundan, co-founder and CEO, Stellapps.

Gurugram-based Country Delight delivers milk and dairy products directly from the farmer to the customer, building a fresh food brand with milk as the mode of entry to the customer’s doorstep.

“We are a customer obsessed business and a product focused organization, we identify where the problem is at the farmer level, cold storage level or last mile level,” says Chakradhar Gade, co-founder, Country Delight.

Country Delight has an integrated cold chain to deliver perishables like milk, curd and other dairy products fresh.

“We don’t add anything to the milk, it’s not recombined with any adulterant, no preservative or milk powder. We use a lot of tech to build monitoring of the milk real time, monitoring the nutritional value, tracking the temperature of the milk, all tankers are sealed electronically via cloud, data analytics and transparency is there,” added Gade.

Gade’s team delivers 3 million orders a month across Delhi, Mumbai, Pune and Bengaluru, and has grown 50 times in the last three years. The milk is delivered within 36 hours of milking, bread within 24 hours from baking and eggs delivered within 72 hours of hatching.

By year-end, it plans to add fresh fruits and vegetables that have been cultivated with precision agriculture and will be delivered within 24 hours of harvesting.

Other grocery delivery apps that deliver milk, work on a subscription-based model like BB Daily, Supr Daily and MilkBasket, where users order daily needs such as dairy-bakery products, vegetables and other essentials.

The latest entrant is Jio Mart which is said to be testing the service in a few locations.

Milkbasket’s vision is to become the default mom and pop shop for over a million households by 2021. It offers over 9,000 products across fruits and vegetables, dairy, bakery, and other FMCG categories across Gurugram, Noida, Dwarka, Ghaziabad, Hyderabad, and Bengaluru and is planning to expand further. Having achieved positive unit economics within the first six months of launch, Milkbasket claims to be the most capital-efficient model in the online grocery space as compared to its peers.

“We are the market leader in the top up space and we try to maintain that position,” said Anant Goel, chief executive and co-founder, Milkbasket.

Dairy tech start-ups are now worried about competition and said multiple players can co-exist.

Gade said that it is still early days as far as dairy tech is concerned.

“It’s a very big industry, very tough as it involves a perishable product, many moving parts, there is lot of unpredictability in the product so one needs lots of expertise or time to master the domain.”

According to Omnivore’s Kahn, “The biggest challenges facing the dairy ecosystem are all rooted in scarcity—lack of labour, lack of green fodder availability, lack of high-quality cattle genetics. I think these trends will result in more farmers choosing to make dairying a full-time, increasingly professionalized activity, as opposed to a side hustle.”