Dairy major Parag Milk Foods is creating specific price points and packaging to drive consumption in the rural markets.
For instance, it has introduced ghee in sachets under its Gowardhan brand in two SKUs of 18 ml and 9 ml at ₹20 and ₹10, respectively.
Being an urban focussed company, it now intends extending its rural reach with lowered prices across its two main brands of Go and Gowardhan for milk, cheese and ghee.
“Rural growth has been under pressure and those FMCG companies which have deeper penetration into the hinterland have suffered in the second quarter. We have been a urban focussed company but as we expand our rural reach we are creating special pricing and lower unit packs to cater to this slow market,’’ says Mahesh Israni, Chief Marketing Officer, Parag Milk Foods.
The Mumbai-based ₹1,440-crore company is creating a basket of products to focus on the rural market.
Apart from its Gowardhan ghee in sachets, it has also extended butter milk and lassi at price points raging between ₹10 and ₹15.
Even its UHT (ultra high temperature processing) milk is being pegged at ₹12.
Explaining the reasons for the slowdown in rural demand, Shirish Upadhyay, Senior Vice-President, Strategic Planning, Parag Milk Foods, said: “it is not just deficient rainfall but even the realisation from agro commodities has gone down for rural consumers which has lowered their disposable incomes.’’
Currently, Parag Milk Foods reaches out to 3,000 outlets, most of which is in the urban markets.
With PE investors like IDFC and Motiwal Oswal, it is now planning to raise ₹325 crore through an IPO.
The funds would be used to repay its ₹100 crore debt, apart from enhancing its working capital expenditure.
Meanwhile, Parag Milk has joined hands with German firm Hochland in a co-branding initiative to launch their new product ‘Go Almette’.
As part of this co-branding, Parag Milk Foods will be importing and marketing the product ‘Go Almette’, a cream cheese product, which will be made available in two variants in the metros beginning from Mumbai.
E-commerce portals will also be roped in for selling the new co-branded cheese brand.
Hochland is one of the largest suppliers of cheese in the European market and the largest supplier of cheese to all the McDonald chains across Europe.