CHENNAI: Aavin is attempting a stealthy price hike with its proposal to launch a new milk variant ‘Green Magic Plus’ at Rs 25 per 450 ml (Rs 50 per 900 ml). The new variant has the exact nutritional content as its standardised variant Green Magic, with vitamins A and B fortified on a trial basis. The Green Magic, which also has 4.5% fat and 9% SNF, is sold at Rs 44 a litre and contributes to around five lakh litres of the 14.5 lakh litres of milk distributed in Chennai daily.
The move aims to minimise losses caused by selling milk at highly subsidised rates. Aavin incurs a loss of Rs 4-Rs 5 a litre on Green Magic. In contrast, private brands sell standardised milk at Rs 54-Rs 58 per litre.
In a recent communication, a senior official from Aavin’s marketing department requested the Tiruchy District Cooperative Milk Producers’ Union to manufacture 20,000 litres of the new variant at the Padalur dairy in Perambalur district.
While Aavin officials maintain that the proposal has not been implemented yet, the move appears to be another strategy to increase prices by reducing quantity. Last year, Aavin introduced ‘Delite’, which has 3.5% fat but costs Rs 44 per litre. Aavin managing director S Vineeth could not be reached for comments.
Terming it a “back door price increase,” TN Milk Dealers Labourers Welfare Association president S A Ponnusamy said, “Aavin is following the practices of private firms. Since 2023, they’ve restricted the supply of Green Magic and are forcing us to sell Delite at Rs 44 a litre.”
Higher production cost for Aavin’s ‘Green Magic’
Industry sources attribute Aavin’s decision to the high demand for Green Magic in Chennai. In November 2023, Aavin proposed discontinuing Green Magic, however, the plan was shelved after opposition.
Aavin purchases cow milk at Rs 38 per litre and buffalo milk at Rs 47 per litre. Of the 36 lakh litres of milk Aavin procures daily, 26-27 lakh litres are sold in sachets, while the rest is converted to dairy products.
Due to low-fat content in the milk, Aavin incurs expenses in purchasing butter or using its own to meet FSSAI standards, Hence, the production cost rises up to Rs 49-Rs 51 per litre,