Sathguru Management Consultants (SMC) provided a comprehensive strategy to support an Indian dairy company to expand its ghee business and diversify into premium segments. The engagement involved end-to-end advisory from market and product strategy to plant design, capex planning, and financial modelling. This enabled the client to scale operations and establish differentiated positioning in the competitive dairy landscape.
Challenge/Problem statement/ Situation analysis
India is among the largest producers and consumers of ghee, yet the market is fragmented with a large unorganized segment and commoditized offerings. The client, operating in the bulk and institutional ghee supply space, aimed to expand into branded retail and new product formats but needed a clear strategy, differentiated brand identity, and infrastructure blueprint to support this pivot. Further, capturing premium value in ghee-based products and establishing presence in channels like modern retail and exports required strategic reorientation and investment planning. The client sought SMC’s support to venture into this transformation journey.
Scope
The scope of SMC’s engagement included:
- Market Landscape and Channel Strategy: Evaluation of current market dynamics, segmentation, and channel-specific opportunities.
- Product Portfolio and Positioning: Identification of differentiated retail SKUs, premium ghee variants, and lateral product extensions including ghee-based spreads and non-food applications like in cosmetics, etc.
- Infrastructure Blueprint: Facility design compliant with GMP norms, production plans and layout for current and future products.
- Capex Planning: Detailed investment roadmap and financial projections including revenue, cost, and profitability analysis.
Approach
SMC adopted a phased approach, first identifying growth opportunities and then formulating a strategic blueprint for execution. This was achieved through:
- Market Overview:
Conducted an in-depth study of consumption trends, growth drivers, regional demand, and competition to define opportunities across retail and institutional segments.
- Product Positioning and New Product Strategy
Based on market gaps and consumer insights, a dual-brand strategy was developed- created a new retail brand with differentiated packaging and smaller SKUs, while retaining the existing brand for bulk and institutional markets.
- Market Channel Segmentation
Key sales channels (modern trade, general trade, e-commerce, cash & carry, and exports) were prioritized based on their growth potential. Entry sequencing, outlet mapping, and volume targets were defined for each channel.
- Product Costing and Revenue Trends
Cost models for various SKUs and pack formats were prepared to assess profitability. Margin optimization strategies were developed based on the SKUs and channel-specific pricing.
- Plant Layout and Design Considerations
A new plant layout was proposed to ensure GMP compliance, operational efficiency and seamless integration with the existing unit and a provision for future expansion.
- Capex and Financial Planning
Estimated capital investment across civil works, equipment, utilities, and infrastructure with phased rollout aligned to milestones. Developed a detailed financial plan covering revenue projection, operating costs, working capital, and ROI to guide funding and implementation
Recommendations
As part of the strategy to enable volume growth and capacity expansion, SMC recommended:
- Launch of a new retail brand with modern packaging for smaller SKUs to drive higher margins.
- Differentiated pricing and positioning of ghee variants across pack sizes and channels.
- Entry into premium retail in metro cities, with phased rollouts in other cities over three years to drive higher volumes and optimize production capacity utilization.
- Phased expansion into e-commerce, exports, and general trade backed by dedicated sales teams.
- Investment in pilot facilities for new product verticals for non-food applications.
- Detailed layout and capex plan for a GMP-compliant facility enabling expansion and new product capability.
Impact
The project enabled the client to launch a differentiated retail ghee brand, scale up production infrastructure, and establish a roadmap for novel applications.