When success flows like milk

We started as farmers and that is what has translated into our success, says Brahmani Nara of Heritage Foods

25 years old, and growing — thanks to milk and milk products.

Innovation and customising products to suit different markets have helped Heritage Foods grow as a national player. Since its recent acquisition of Reliance’s dairy business, the company has spread its wings farther.

In an interview with BusinessLine, Brahmani Nara, Executive Director, Heritage Foods, spoke on the company’s success mantra and the way ahead, while sharing interesting insights. Excerpts from the interview:

Heritage started as a Telangana player. But, today, you have a wide reach. Could you elaborate on your market strategy?

Till a couple of years back, Heritage was dominant only in Telangana, but today we have our operations in Delhi and other north and south markets too. Since dairy has huge potential and the value-added products space is hardly explored, we wanted to be a strong player by customising our curd, ghee, butter and paneer to the tastes of customers.

You may know that we recently signed a joint venture with Novandie, an international company, to make flavoured yogurt.

On our market strategy, I would say that it is slightly different from other companies as we want to reach out to as many farmers as possible. We started as farmers and that is what has translated into our success, Heritage is a national company today. We believe in procuring milk close to the market we service.

You might see several companies operating out of one or three processing facilities but Heritage today actually operates through 18 processing facilities across the country. This has been our unique go-to-market strategy and we take pride in it.

How has the Reliance acquisition helped Heritage?

We acquired the business in April last year. The biggest advantage with Reliance was that it had its own procurement network. This suits Heritage since the company makes direct procurement and not through any intermediaries.

In terms of reach, Reliance has presence in several States in the north, including Delhi, Haryana, Punjab, Rajasthan, Himachal and UP, and Heritage now sells in these markets. But then, we have also made some changes. The milk processing that used to happen in an outsourced process facility is being moved in-house now.

We also rationalised the procurement process, that is, in States where the company already had procurement presence or was procuring less volume, we relocated such centres to other places.

On the market side, while there is continuous growth, we have discontinued in one or two markets where the volume was low, such as Madhya Pradesh.

From where do you source your milk? Do you have aggregators?

We source all our milk directly from farmers at the village level. We procure milk from over three lakh farmers directly on a daily basis.

And procurement is made every day twice. But in case there is need for extra milk, we go through aggregators but usually only the direct route is preferred.

But the local dairy players will be able to provide better terms for the farmers, how do you handle the competition?

I don’t agree with that perception. Given the focus and scale of operations that Heritage has, we are not only able to pay farmers on time but also precisely. We are able to do it better than others, especially in terms of technology.

We are able to deploy something called milk analyser at the village level, where the milk procured is consolidated and on a real-time basis the quality of milk is detected instead of manual processing. This helps farmers get the right price.

But this is not the case all the time in the dairy industry. And smaller players probably don’t have the wherewithal to invest in an analyser which would easily cost ₹80,000-1,00,000.

We also provide welfare benefits such as accidental death insurance and offer subsidised cattle feed. This cattle feed is produced by Heritage itself and it is better in terms of quality and also relatively less expensive compared to products of competitors.

We also run the Heritage Farmers Welfare Trust. For every litre of milk we procure, we put 10 paise in the trust and farmers also put in the same amount.

Through these funds, we are able to carry out beneficial activities for their livestock and dairying, for example, we distribute stainless milk cans and mosquito nets.

How are the farmers paid? What is your procurement cost?

It depends on the regions we are operating in. Farmers are paid either once in 10 days or fortnightly. They get their payment on time.

The procurement prices are driven by competition, weather conditions and international dairy prices.

How many distributors do you have? What is your reach?

We have about 7,000 agents that sell our milk and products. We work with about 1.2 lakh retailers and reach 15 lakh households on a daily basis through the delivery of milk. We also have our own distribution channels, called Heritage Parlour. These are something like kirana stores but they hold our brand, it is a franchise model.

Since milk is a perishable product, how is it being stored and how long?

We have a sealed cold chain. The process is like this — our vehicles visit the villages daily and collect milk. The milk collected is aggregated into trucks, brought to our chilling facility and chilled at 2-4 degree Celsius or lower than that. At that temperature, bacterial growth is hindered.

As our trucks, from close to 200 chilling facilities, move to the processing facility, the same temperatures are maintained. The milk is then processed to curd or other products. The products go to market the next morning.

The whole cycle is not more than 24-36 hours — for the milk to be procured and for it to turn into a finished product. We don’t believe in storing products for a long time and that’s where our strong distribution network comes into play, hence we are able to operate the dairy business.

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