New-age dairy for new markets: Introducing Frubon


27 Mar 2024



Ankita Balotia

New-age dairy for new markets: Introducing Frubon

For several years now, India has been the largest producer of milk in the world, accounting for almost a quarter of the planet’s annual production. What’s fascinating, though, is that unlike the EU and the US – also very large producers of dairy – India is not a huge exporter, but instead, a large consumer of milk and milk products. This high level of domestic consumption is set to grow even further, to a predicted $380 Bn by 2028 at a CAGR of 13.2%.

It is in Rajasthan that a dairy company named Frubon has begun its mission of disrupting  this highly traditional and innovation-averse sector. How are they doing it? Through a unique combination of high-quality products, exciting forms and flavours, and highly accessible distribution and pricing. Every product goes through 36 quality checks, and contains only the finest ingredients. The complete range of Frubon milk, paneer, ghee, ice cream, milkshakes, lassi, and curd is currently available in Rajasthan, UP, and Delhi NCR.

The background

Dairy is a key part of India’s exploding consumption story. Invest India attributes the growth in dairy to drivers like increasing urbanization, investor friendly government policies, and improvement in cold chain infrastructure. Equally relevant are changes in the consumer profile, with rising disposable income, and higher out-of-home consumption of ice cream, yogurt, and flavoured milk.

In our study of the category, we realised that the value-added dairy product segment was growing at twice the pace of milk. This is particularly notable, since the gross margins in that segment are more than double that of milk.

The consumer

Today’s consumer isn’t satisfied with the products that won over their parents. They seek better offerings, including:

Convenience: As more and more women join the workforce, they are even more pressed for time. This set of younger, busier consumers seek convenient dairy products, like ghee, butter, paneer, curd, and khoa. Unlike previous generations, they are very keen on buying them in packaged form, rather than making them at home.

Health: Across age groups, consumers are seeking healthy alternatives to products they regularly use. Examples include antibiotic-free milk, and packaged paneer. Epecially post-Covid, their trust in unpackaged products has dropped significantly.

Quality: The growing awareness of quality and standardization has made consumers extremely brand conscious. They seek an upgrade from unorganised players when it comes to products like milk, lassi, and buttermilk.

Variety: Greater awareness of different products, a rapidly changing lifestyle, and rising affordability have combined to encourage impulse purchases like ice cream, flavoured milk, and flavoured lassi. New discovery and delivery channels such as q-commerce and e-commerce help fuel this trend further.

The opportunity

The dairy sector has been predominantly controlled by large traditional players. However, across the country, smaller, nimbler, more modern Davids have been giving these Goliaths a run for their money. State by state, we have seen private dairy companies challenging the dominance of co-operatives – much like we’ve seen new-age consumer brands take on legacy MNCs in other categories.

In Andhra Pradesh and Telangana, it’s Heritage vs. Vijaya. In Maharashtra, it’s Parag (makers of Gowardhan and Go) vs. Mahanand. In Karnataka, it’s Akshaykalpa vs. Nandini. And in Rajasthan, it’s Frubon. These younger brands understand today’s consumers, and their right to win is based on:

Functionality: Co-operatives have traditionally had a strong hold on milk sourcing, however this may not always extend to maintaining the quality of milk beyond standard practices. New-age brands have the opportunity to make this a differentiator by maintaining a higher quality of milk, building products for specific consumer use cases and needs, like high-protein and high-calcium milk for kids, around which they can make functional claims.

Specialisation: Value-added dairy products require a specialized supply chain and distribution channels. to give you an example our ice cream requires a completely frozen supply chain and deep freezers at the point of sale. However, butter and paneer require a chilled supply chain. Private companies can invest in interventions like these, and set up FMCG-style distribution points to distribute these products.

Innovation: Co-operatives have largely been sellers of milk and not of other innovative products. New-age brands that will have the opportunity of launching high-margin, highly attractive value-added products that appeal to the consumer for their innovation. For instance, Frubon is able to provide flavours usually found in ice cream parlours – like chikoo, rajbhog, and sitaphal – in party packs or tubs.

Awareness: Perhaps the largest opportunity lies in the ability of new-age brands to make themselves relevant to a new generation of customers, and create an emotional bond that supplements the brand’s novelty, innovation, and high quality.

The market

The fastest growing category in the rapidly expanding Indian dairy market is ice cream, at a 20% CAGR. While regional co-operatives still dominate the milk and low value-added products, it’s private players that dominate the ice cream and higher value-added space, whether flavoured milk, chhaas, lassi, cheese, yogurt, cup curd, or paneer.

The gap

Despite Rajasthan being India’s second largest dairy market, it has faced severe issues like adulterated milk, fake ghee, and poor quality products. Most co-operatives only follow the standard, and mandated, FSSAI guidelines.

Innovation and new products remain a stumbling block, and the fact that value-added dairy products require a chilled or frozen supply chain has been an additional challenge. In the ice cream segment, for instance, Frubon has built salience through better service levels than competition, and seized the opportunity for branding and visibility.

They also plan to solve for unaddressed need areas like dairy products with functional benefits, like high-calcium milk, or antibiotic-free curd, or vitamin-enriched flavoured milk, as well as locally relevant specific ingredients like curd for kadi.

The moat

Frubon has made high quality the heart of its offering, and this is enabled by a stringent QC process that is over and above the FSSAI parameters. This is possible because of its 60,000 sq ft manufacturing facility with automated milk processing and ice cream manufacturing lines, and the heavy adoption of technology, which manages farmer traceability, inventory management, processing, and salesforce management.

The brand has a completely integrated value chain, from milk sourcing, to manufacturing, to distribution, which is closely managed by a strong founding team with experience in the family business, as well as direct access to the network of farmers for milk procurement.

The ESG approach

Frubon’s mission is to provide great quality milk and ice cream to Bharat while raising the quality of life for the entire dairy ecosystem they work with – improving the health and productivity of cattle, raising farmers’ income, and creating entrepreneurs at the bottom of the pyramid.

Technology ensures transparency, and builds trust between Frubon and farmers. The company partners with them to improve the milk they provide, whether by offering them high quality feed, or educating them on best practices, or even through an app to guide farmers on cattle health and fertility.

Frubon is also a new-age brand, and uses resources responsibly. A 100% plastic recycler since 2021, the company uses no virgin plastic in their secondary and tertiary packaging – it is 100% recycled plastic or recycled paper. The Frubon factory uses solar panels for renewable energy, as well as treats waste water in its own ETP.

At Fireside Ventures, we’re thrilled to partner a brand that’s using technology and transparency to correct decades-old problems and inequities, and build a next-generation dairy company for the masses. Frubon’s founders have a laser sharp vision of uplifting every stakeholder in the entire dairy ecosystem in their aim to build “the Infosys of dairy.” Their approach has won them the trust and respect of farmers, and the love and appreciation of consumers. It’s a privilege to be part of their journey.

Join the discussion

Please note, comments must be approved before they are published