Elaborated SWOT Analysis of Parag Milk Foods – An Indian Milk Manufacturing Company

Quick Stats on Parag Milk Foods

Founder	Mr Devendra Shah
Year Founded	1992
Origin	Pune, India
No. of Employees	1,800+
Company Type	Public
Market Cap	Rs 1,040.55 Crore (2022)
Annual Revenue	Rs 70 Crore (2021)
Net Income/ Profit	Rs 11.21 Crore (2021)

Products of Parag Milk Foods

• Milk
• Butter
• Cheese
• Ghee
• Cottage Cheese
• Yoghourt

Competitors of Parag Milk Foods

• Dean Foods
• Alpina
• Tastefully Simple 
• Second Cup

As now we have a better understanding of Parag Milk Foods, let’s look into the SWOT Analysis of Parag Milk Foods.

SWOT Analysis of Parag Milk Foods

Parag Milk Foods is India’s leading and most trusted milk production company, carrying out a detailed SWOT Analysis of Parag Milk Foods helps in finding its strengths, weaknesses, opportunities and threats. Understanding internal strengths and weaknesses and external opportunities and threats. SWOT-analysis helps in forming correct objectives and plans for the future. 

So let us go ahead and first have a glance at the strengths of Parag Milk Foods from the SWOT analysis of Parag Milk Foods.

Strengths of Parag Milk Foods

Strengths represent everything that an organisation is good at and why it sets them apart from the competition. They are the internal and positive attributes of any company. Parag Milk Foods’s strengths are 

• Wide Range of Products: Parag Milk Foods has a diverse portfolio in over 15 consumer-centric product categories including ghee, fresh milk, skim milk powder, whole milk powder, paneer, an array of processed and natural cheese, cheese spreads, butter, dahi, dairy whitener and gulab jamun mix. This helps Parag Milk Foods to explore more revenue streams.
• Popular Products: Parag Milk Foods’s Go cheese is India’s second-largest producing cheese and it is also the country’s largest producer of cow ghee under its brand Govardhan. The company generates half of its revenue from these 2 products.
• Business Model: Parag Milk Foods deals in the dairy industry and this industry is said to be endless because dairy products like milk, ghee, butter and cheese come under daily goods and work as many for necessity.
• Robust Technology: Parag Milk Foods dairy farms are set to global standards including a modern cheese plant that is fully automated with state of the art technology, and a ghee plant with a traditional way of making ghee like made at home. The technology ensures that the company never compromises on the quality of its products. 
• Number of Acquisitions: In 2018, Danone a Spain based dairy products company decided to shut its operations in India, immediately after that the Danone facility of Sonipat, Haryana was acquired by Parag Milk Foods. This had advantaged the company to get access to a processing capacity that produces 75,000 litres of milk in a day along with 15 tonnes of yoghurt.
• Superior Quality: One of Parag Milk Foods’ primary mottos is to provide premium quality products that are healthy and nutritious and it is standing on its commitments which led it to become one of the world’s largest health-focused dairy providers.
• Distribution & Reach: Parag Milk Foods is a global brand, brand that sells in countless countries. Parag Milk Foods’s robust distribution network makes sure that the products reach the consumers in the easiest and best possible way.

Weaknesses of Parag Milk Foods

Weaknesses pull an organisation back from performing at its best. They are the negative internal factors that weaken business strengths. A few drawbacks or weaknesses of Parag Milk Foods are

• Improper Strategy: Upon further inspection, one can find out that the focus of all marketing efforts is long-term and that there are gaps in its short-term strategy formulation.
• Niche Market Segment: Parag Milk Foods’s premium pricing strategy allows its sales volume to reduce significantly as various lower economic sectors of the market go unexplored. The price of its product Gowardhan ghee is relatively higher than other ghee products on the market. 
• Incompetency in Indian Market: Parag Milk Foods’s presence in India contributes greatly to its sales value however it has been constantly falling due to the leading dairy manufacturers like Amul and Mother Dairy.
• Limited Supplier Contracts: Parag Milk Foods relies too much on a handful of suppliers for its raw material which is milk purchased from farmers and this increases the risk factor greatly.
• Limited Attention on Other Segments: Parag Milk Foods exclusively focuses on revenue from its dairy segment which often gets the other segments overlooked.
• Great Old Talent Taking Exit: Recently, Parag Milk Food CFO and key managerial personnel resigned from the company due to some personal issues. The exit of such an old talent can significantly disbalance the internal system of the organisation.

Opportunities for Parag Milk Foods

Opportunities are the factors that provide an organisation with a chance to edge over others. They are the external factors that can contribute to the success of any company. Certain opportunities that Parag Milk Foods have:

• Fitness Movement: Several health issues and epidemics tend to threaten the lives of various people and as they move towards a healthier lifestyle, Parag Milk Foods can be among the first brands to introduce organic products.
• Plant-based Nutrition: The shift to veganism allows Parag Milk Foods to take advantage of this opportunity and diversify its product portfolio.
• Acquisitions & Partnerships: Parag Milk Foods has established its presence in India through various acquisitions and mergers which also opens up the prospect of several more.
• Product Diversification: Due to its rising revenue, Parag Milk Foods has the opportunity to invest its revenue in research and development which will increase the number of products and their features ultimately leading to it gaining a competitive advantage in the market.
• Growth Expectations: In a recent report, Parag Milk Foods said that “the company is expecting an increase in annual revenue of Rs 400 crore by 2027-28 of its premium milk brand ‘Pride of Cows’ following growing popularity. 

Threats to Parag Milk Foods

Threats are those factors that have the potential to provide harm to the organisation in any form. The threats of Parag Milk Foods are as follows:

• Severe Competition: The competition is extremely cut-throat in the food industry. Some of its chief local competitors are Dean Foods, Alpina, Tastefully Simple and Second Cup. The leading national competitors are Amul, Patanjali and Mother Dairy.
• Entry of New Competition: Due to the FMCG industry being an opportunistic, ever-evolving field, the entry of potential players into the market is easy.
• High Substitution Rate: Due to the availability of various substitutes like local distributors and local dairy plants available across several product categories, it is very easy for consumers to substitute Parag Milk Foods’ products.
• COVID19 Pandemic: COVID19 has caused a disastrous economic impact on economies and individuals which reduces the probability of consumers opting for dairy products that are labelled by brands like Parag Milk Foods, based on which customers are compromising on quality and thinking from the price perspective.
• Hike of Prices: The company has increased the price of its Gowardhan brand of cow milk by Rs 2 per litre following the Amul brand introducing a hike in its milk prices. Increasing prices can lead to consumers switching to local distributors.
• Challenges from Government: The company faced challenges from the Government of India in 2004 when the government banned the export of milk powder on account of local milk shortage which led to the company switching to other product segments. Such interruptions again can affect the operations of Parag Milk Foods.

This ends our elaborated SWOT analysis of Parag Milk Foods. Let us conclude our learning below.