Prabhat Dairy: “Moo-ving” Forward - mbacasecomp.com of South Carolina ... Indian Milk Market. 13. Indian Milk Market ... To increase our liquid milk B2C business through the penetration

Prabhat Dairy: “Moo-ving” ForwardUniversity of South CarolinaJessie FarrarBo GilliamRebecca McDonaldMadeline Senior

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January 5, 2017

Strategic Options Tactical Steps Alternatives Operational Steps Risks and Mitigation

Vision

We want to expand our product offerings in B2C market by entering into Tier 2 and

Tier 3 city markets.

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Presentation Overview

Strategic

Tactical

Operational

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Key Deliverables

Recommendation

Implementation

Risks and Mitigation

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Agenda• Key Deliverables• Strategic OptionsStrategic Options• P.I.T.C.H. Framework• Current Financial LandscapeTactical Steps• Decision Grid• Our VisionAlternatives• Budget• TimelineOperational Steps• Additional Consideration• DeliverablesRisks and Mitigation

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Key Issue

How do we expand our B2C offerings

and reach out 50:50 B2B:B2C goal?

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Reality Check: Our B2B is currently

70% of our business


What Does Success Look Like

Increased brand recognition by consumer in Tier 2 and Tier 3 cities

Increased liquid milk market share in new markets

Increased optimization of supply chain to promote efficiencies

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Performance Gaps

B2C marketing

Supply Chain

B2C presence

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Strategic Options

Growth Stability Retrenchment

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Alternatives

Continue in current B2B market.

Increase presence in B2C market in Tier 1 city.

Increase presence in B2C market in Tier 2 and Tier 3 cities.

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Tactical Steps

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Product Infrastructure Technology Competitors Human Capital

McKinsey P.I.T.C.H. Framework12



Indian Milk Market13

Indian Milk Market Maturity

Inte

rnal

Strengths Weaknesses

Current B2B business

Strains on cash flows

Steady revenue stream Supply chain

Exte

rnal

Opportunities Threats

Population moving to Tier 2 and Tier 3 cities

Intense competition in major cities

Rising population incomes

Government regulation and involvement



Stakeholders14

Stakeholders

Government

Business Customer

Individual CustomerEmployees

Farmers

Government Supported CO-Ops

Quality Control and Safety

Steady Work, Prices, and Help in Output Efficiency



Our B2C Customers15

72% rural areas, 28% cities

Many income levels and languages

Live in Tier 2 and Tier 3 cities

•As income grows, purchasing power will rise

Growth opportunity for under 30 (50% of population)

•Highly price sensitive

Spend 50% of income on food

Paisa VasoolLow price for the

highest quality available



Our Value Chain16

Inputs

Production

Processing

Distribution

Marketing

Consumption

Prabhat’s Portion of Supply Chain



Efficiency17

Between 2012 to 2015,

Inventory days increased from 17 to 23 days.

Receivables increased from 35 to 76 days.

Increased Operations and Supply Chain Expediency to Reduce Time to Market



Technology to Consider18

Data Analytics• Low Cost Options for India• Ensure that Technology is used to ensure pasteurization is

up to date• Mitigate Potential Safety Concerns• Wealthy Customers buy from MNCs for this reason



The Competition19

WhiteSpace

Price Points

Market Penetration High

Low

HighLowMondelez

Amul

Nestle

Mother Dairy

Prabhat



Our Employees20

1,200 employees

Headquarters: Mumbai

Farmers• Current pay• Go to coops

Current employees• Organizational structure


India’s Current Milk Market• Disposable Income and Milk Prices on the Rise• Rising milk procurement prices have had adverse impact on packaged milk

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Skim Milk Prices in Mumbai (in RS)*

2016 2017 2018 2019

Prabhat 65 69.5 74.4 79.6

Amul 70 74.9 80.4 85.8

Danone 75 80.3 85.9 91.9 Assu

mpt

ions 7-8% increase per

year anticipated

5-6% inflation

* For 500mL bottles


Customer Purchasing Power on the Rise

By 2030, 24% of the Indian Population will have an

income of > $11,000

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Alternatives

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AlternativesContinue in current

B2B market.

Pro: Stable revenue

Con: Losing out on new market

Increase presence in B2C market in Tier 1

city.

Pro: Large population and low distribution

costs

Con: Heavy competition by MNC

Increase presence in B2C market in Tier 2

and Tier 3 cities.

Pro: Low competition present, increased buying power and

continued urbanization

Con: Relatively higher distribution costs

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Our Vision

Phase 1: Development of Implementation Plan

Phase 2: Marketing and Analytics

Phase 3: Roll-out

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To increase our liquid milk B2C business through the penetration of Tier 2 and Tier 3 markets and optimizing supply chain.

Operational Steps

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Phase 1 • Strategize a 1-year plan and implementation plan for expansion into

B2C liquid milk market• Use of data analytics to estimate resources necessary to meet success factors.

• Streamlined supply chain strategy to be implemented by Q3• Plan for possible company reorganization to meet optimization

• Develop detailed operations implementation plan for supply chain strategy

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Phase 2 • Analysis of the use of buffalos for our expansion

• Breakdown o how viable this plan could be, the cost, and possible benefits

• Marketing strategy for Tier 2 and Tier 3 cities that emphasizes our slightly below competitor cost but still high quality product

• List of viable Tier 2 and Tier 3 cities to enter first

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Marketing Plan

We need a strategy that will market to the following stakeholders:•Our farmers•Kiranas•Customers

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Marketing MessageOur farmers: Focus on desired company growth and rising potential income by remaining loyal to Prabhat

Kiranas: Encouraging Kirana owners to bring informed farmers into Prabhat’s network as we expand.

Focus on high quality through our technology while continuing to focus on lower prices.

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Phase 3• Distribution and logistic plan for implementation of liquid milk

products in Tier 2 an Tier 3 cities • With identification of distribution company to hire

• Breakdown of convenience stores and kiranas where our products can be sold

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Timeline

Phase 1: 30 days

Phase 2: 60 days

Phase 3: 90 days

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Budget

Total Budget (in ten million rupees)

2016 RS 117.20

2017 RS 58.6

2018 RS 58.6

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Budget Breakdown per Year

60% to Operations and Supply Chain

29.3% to Marketing

29.3% to Data Analytics


Risks in MitigationRisks• Other competitors entering Tier 2 and Tier 3 city markets.• Difficulty finding dairy farmers who are capable of

supplementing our new B2C business.• Distribution channels are unable to handle our supply.

Mitigations• Extensive marketing campaign launched upon entering these

markets.• Slightly raising price floor for our farmers as incentive to

come work for us.• Large distribution company such as FedEx or UPS to

supplement our distribution system.

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Additional Considerations• Once established in new market with milk product, research about

expanding portfolio into the yogurt market • Strategic shift to increase in buffalo milk farming versus cow milk

farming• Research into partnerships between farmers and slaughterhouses for the sale

of buffalo animals after their useful lives

• Explore how to increase milk output per cow by manipulating quality of feed, based on best practices in Europe and the United States

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Deliverables

Increased brand recognition by consumer in

Tier 2 and Tier 3 cities

Increased liquid milk market share in new

markets

Increased optimization of supply chain to

promote efficiencies

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Thank you!

We will now take questions

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Slide Index• Vision

• Presentation Overview

• Key Deliverables

• Agenda

• Key Issue

• What Does Success Look Like

• Performance Gaps

• Strategic Options

• Alternatives

• Tactical Steps

• McKinsey P.I.T.C.H. Framework

• Indian Milk Market

• Stakeholders

• Our B2C Customers

• Our Value Chain

• Efficiency

• Technology to Consider

• The Competition

• Our Employees

• India’s Current Milk Market

• Customer Purchasing Power on the Rise

• Alternatives

• Alternatives

• Our Vision

• Operational Steps

• Phase 1

• Phase 2

• Marketing Plan

• Marketing Message

• Phase 3

• Timeline

• Budget

• Risks in Mitigation

• Additional Considerations

• Deliverables

• Thank you!

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Documents

Prabhat Dairy: “Moo-ving” Forward - mbacasecomp.com of South Carolina ... Indian Milk Market. 13. Indian Milk Market ... To increase our liquid milk B2C business through the penetration