Kamdhenu Dairy which was Rajnagar District Cooperative Milk Producer’s Union, was one of the biggest dairy unions of Gujrat during the Operation Flood programme. The decision to diversify into distribution of tea was a form of product portfolio diversification through the process of reverse supply chain initiative i.e marketing products back to its farmers. Kamdhenu Dairy should diversify its product portfolio by continuing with its relatively new Tea marketing business. The reasons for this decision are the following arguments:
a) India consumes about 80% of the total output. Thus the domestic demand for the beverage is much higher than the international demand b) It can fit in the ‘Branded-Regional-Domestic’ market as the segmentation of the product c) Government is also bringing in favorable changes to boost exports there by the competition in the domestic market is expected to go down a bit giving new entrants like Kamdhenu Tea a chance to get better market share d) Procurement price is rather low as Kamdhenu already has a strong established network from its dairy business in the form of DCS(Dairy Cooperative Society) e) Kamdhenu Dairy has the professional manpower, Financial muscle and its existing DCSs which tip the scales in its favor while distribution is considered f) Further, sales can be augmented through the RPSs (Rural Provision stores) and Sub RPSs which are to be established at the Taluka level and DCS level there by giving higher access to the end users g) This far only 432 DCSs have stocked Kamdhenu Tea once which leaves more than 60% of its total market untapped thus the Kamdhenu Tea brand can reach so many villages which none of its competitors can boast. Thus We feel that Kamdhenu Dairy should capitalize on this growth opportunity. It should not consider itself tyo be only in the Dairy business but in the packaging and marketing of packaged food items, not be product oriented but customer oriented. By diversification into Tea the customer...
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