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How A Poor Boy Built A 2000Cr Dairy Company And Beat Giants: Business Case Study

Think School・20 minutes read

Satish Kumar built Milky Mist into a 2,000 CR business by adding value to milk through products like paneer, ghee, and ice cream, overcoming challenges like industry dominance and technology. Strategic location, farmer support, and quality control helped Milky Mist secure loyalty, quality milk supply, and competitive advantage, showcasing the importance of value addition and branding in the dairy industry.

Insights

  • Satish Kumar, founder of Milky Mist, succeeded in building a 2,000 CR dairy business by focusing on value-added products like paneer, ghee, and ice cream, which increased margins, reduced competition, and extended product shelf life.
  • Milky Mist overcame challenges such as fragmented milk sources and inconsistent quality by strategically locating in milk-rich areas, offering farmer support services, and collaborating with farmers to secure loyalty and competitive advantage, showcasing the importance of quality control and strategic partnerships for long-term success in the dairy industry.

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Recent questions

  • How did Satish Kumar build his dairy business?

    Despite lacking money, brand value, and investor backing, Satish Kumar built a 2,000 CR dairy business by focusing on adding value to milk through products like paneer, ghee, and ice cream.

  • What challenges did Milky Mist face in the milk industry?

    Milky Mist faced challenges such as fragmented milk sources, farmer loyalty issues, and inconsistent milk quality in the competitive milk industry in India.

  • How did Milky Mist overcome competition and boost margins?

    Milky Mist overcame competition and boosted margins by producing value-added products like paneer, ghee, and ice cream, which reduced competition, increased margins significantly, and extended product shelf life.

  • What strategies did Milky Mist use to address challenges?

    Milky Mist strategically located in a milk-rich area, offered farmer support services, ensured consistent milk quality, and collaborated with farmers by providing financial aid, veterinary care, and technology education to secure loyalty, quality milk supply, and competitive advantage.

  • How did Milky Mist solve logistics and refrigeration issues?

    Milky Mist distributed 20,000 chillers to retailers, installed chilling technologies in trucks for cold storage during transportation, managed transportation with purchased trucks, and implemented a return logistic system to optimize costs, avoiding outsourcing logistics to maintain quality control.

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Summary

00:00

Milky Mist: Teen Builds 2,000 CR Dairy

  • The story revolves around a 17-year-old boy named Satish Kumar who built a 2,000 CR dairy business despite lacking money, brand value, and investor backing.
  • The milk industry in India is challenging due to short product shelf life, low margins, and intense competition, with Amul leading the white revolution.
  • Operation Flood, from 1970 to 1996, transformed India into the world's largest milk producer, under the National Dairy Development Board.
  • Satish Kumar founded Milky Mist, now a 2,000 CR brand, overcoming the industry's dominance by money, brand value, and technology.
  • Milky Mist's success stemmed from adding value to milk, increasing margins significantly by producing paneer, ghee, and ice cream.
  • Value-added products reduced competition, boosted margins, and extended product shelf life, aiding Milky Mist's growth.
  • Economic reforms in 1991 led to increased demand for high-protein products like paneer, benefiting Milky Mist's market positioning.
  • Challenges faced by Milky Mist included fragmented milk sources, farmer loyalty issues, and inconsistent milk quality.
  • Milky Mist addressed these challenges by strategically locating in a milk-rich area, offering farmer support services, and ensuring consistent milk quality.
  • By collaborating with farmers, providing financial aid, veterinary care, and technology education, Milky Mist secured loyalty, quality milk supply, and competitive advantage.

14:26

"Milky Mist: Quality Paneer Logistics Success"

  • Five star hotels in Bangalore have strict regulations for high-quality paneer storage between 0 to 4°, leading Milky Mist to fulfill their criteria and gain initial customers.
  • Milky Mist faced challenges when expanding to kirana stores due to lack of refrigeration, resulting in a short shelf life for paneer.
  • To solve logistics and refrigeration issues, Milky Mist distributed 20,000 chillers to retailers and installed chilling technologies in trucks for cold storage during transportation.
  • Milky Mist chose not to outsource logistics to maintain quality control, eventually purchasing trucks to manage transportation and implement a return logistic system to optimize costs.
  • Lessons learned from Milky Mist's success include adding value and branding to escape price wars, collaborating with partners for mutual benefit, and prioritizing quality control over outsourcing for long-term success.
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