CHENNAI: To reduce expenses incurred for purchasing butter for reconstitution of milk to enhance the fat content in milk and milk products, the state-owned Aavin has decided to discontinue the sale of its standardised milk variant, Green Magic milk, across the state. Currently, Green Magic milk of Aavin holds a 6 lakh litre market share out of a total of 14.75 lakh litres sold daily in Chennai.
Green magic milk, with 4.5% fat, has already been discontinued in a few districts and will be replaced with fortified cow milk (3.5% fat) enriched with vitamins A and D in Chennai and other districts in the coming months. Both variants are priced at Rs 44 per litre, while private brands of standardised milk range from Rs 54 to Rs 56 per litre.
Aavin’s milk has a lower fat content compared to private brands, due to which it spends Rs 67 to Rs 70 crore per month for buying butter to reconstitute its milk to meet the required fat levels set by FSSAI in their milk products. Fat content must be at least 3% for toned milk, 4.5% for standardised milk, and 6% for full cream milk.The replacement of green magic with low fat purple milk is expected to reduce the cost by 10-15%. However, Aavin officials have remained tight-lipped.
Dairy Minister T Mano Thangaraj and top officials of Aavin claimed that the decision was aimed to cater to the diverse needs of consumers. However, data accessed by TNIE show that Aavin produces a total of 108 to 116 tonnes of fat from 28-30 lakh litres of milk it procures from farmers each day. The amount of fat falls short of its actual requirement of 139-142 tonnes.
To make up for this deficit, Aavin needs 950 to 960 tonne of butter per month for reconstituting milk and milk products. In addition, Aavin requires 450 tonne butter for selling butter and ghee through its outlets and retail shops. Consequently, the average monthly demand for butter amounts to 1,395-1,400 tonnes.
Aavin procures butter through NCDFI portal, an agency authorised by the union government, at an average price of Rs 475-Rs 485 a kg. This results in Aavin spending Rs 66-Rs 69 crore a month, leading to an annual expense of over Rs 800 crore.
S Vineeth, MD of Aavin and Milk Commissioner, told TNIE that the federation plans to introduce a large-scale supply of fortified cow milk, which is in high demand among consumers. “We will gather feedback from consumers, and accordingly will replace green magic with the new variant in the coming months. Aavin can produce a maximum of three major variants (blue,purple & orange), so continuing with green magic is not feasible.”
The Aavin wanted to explore different market options by offering different ranges of products and the introduction of purple milk will not bring down expenditure significantly. “Aavin milk is cheaper by Rs 10 to Rs Rs 12 a litre compared to private milk,” added Vineeth.