Things to Consider before Starting a Milk Distribution business

Sneha Santra
Sneha Santra Jul 31 2019 - 3 min read
Things to Consider before Starting a Milk Distribution business
The dairy sector has been growing at 6.4 per cent annually over the past four years.

You could be receiving milk packets on your doorstep every morning or visiting the nearest shop to collect them yourselves. But have you ever wondered how they always are available early morning? And, can it make a profitable business opportunity?

Dairying has been inherent in Indian culture for centuries. Our country has had a rich tradition in dairying since ancient times. The Indian dairy market is amongst the largest and fastest-growing markets in the world and also the largest consumer of milk and milk products. And for good reason too. The reason is simple:  milk is not just the morning glass you drink before you sprint out of the house. Its uses go far beyond the dietary and nutritional; it’s a habit, something that we cannot imagine life without. Milk is second only to water in India and with changing lifestyles, people's timings have changed but the need for milk hasn't.

The milk sector had been growing annually by an average of 4.2 per cent. But in the last four years, the growth registered has been much more; it grew 6.4 per cent annually over the past four years.

To make available the packet of milk at your doorsteps every morning, dairy companies are penetrating deep into the market via their vast distribution channel. Distributorship/dealership is a very important part of the dairy industry and one of the most active.

The demand of milk and milk products isn’t going down anytime soon; in fact, it’s increasing day by day, and therefore starting a milk distribution business is one of the lucrative business opportunities in India.

Understanding the Distribution Channel

Milk is the perishable and liquid commodity with strict quality measures. Before venturing into the distribution business, you must understand the basics that include the channel through which it is being distributed. The channel of milk distribution varies greatly from other products. Let’s take a look at the milk distribution channel of a popular brand:

How to Start a Milk Distribution Business

Research is an integral part of any business. Before starting the milk distribution business, develop a thorough understanding of how it works. Study and find out more about

-Sourcing of milk

- Storage of milk

- Customers base (b2b or b2c)

- Quality control

- Transportation (chilled van etc.)

After gathering more information about the above topics, craft a business plan for milk collection, processing and distribution to end customers. You can approach banks for finance to purchase delivery vehicles, bulk milk coolers etc.

Profit Margin

Milk distribution is a profitable business opportunity considering the demand-supply gap in the market. The profit margin in milk varies with respect to location, type of milk (Full cream/toned/double toned/flavoured milk, etc) and with the brand. Typically, a distributor would roughly get INR 20-25 per crate (12 liters).

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