Heritage Foods shakes it up

V Rishi Kumar | Updated on August 08, 2021

Fresh purpose: Nara Brahmani is transforming Heritage Foods into a health and nutrition player   -  BIJOY GHOSH

The Hyderabad-based dairy brand is pushing value-added products to transform into a big health and nutrition player

The heritage of Nara Brahmani, the young, vivacious daughter-in-law of N Chandrababu Naidu, former CM of Andhra Pradesh, may be political and star-studded, but her focus is totally business-oriented. The granddaughter of the superstar chief minister NT Rama Rao (she married her cousin Nara Lokesh, son of Chandrababu Naidu who is NTR’s son-in-law), and daughter of actor N Balakrishna, has been the driving force behind the Hyderabad-based dairy brand Heritage Food’s aggressive expansion and national ambitions.

The Stanford-educated Brahmani, who interned at Danone, is leading Heritage Foods’ transformation into a health and nutrition player as well as expanding its footprint. The company set up by the Naidu family in 1992, which listed publicly in 1994, with 54 times over-subscription, is making a bigger push towards value-added products (VAP) beyond lassis, curds, ice creams and cottage cheese. For instance, it has forayed into Ready To Eat and Heat n Eat segments — earlier this year, it launched paneer tikka, and strengthened its VAP proposition by launching spiced butter and cup curd.

It is looking at expanding its footprint further. Heritage has already entrenched itself in the five southern states, and made inroads into Maharashtra, Odisha, Delhi, Haryana, Rajasthan, Uttarakhand and Uttar Pradesh. It has widened its consumer base from 1.2 million in FY17 to 1.5 million in FY21. “Five years down the line, we aspire to transform Heritage into a health and nutrition company engaged in milk and milk products,” says Brahmani Nara, Executive Director.

During FY2020-2021, Heritage Foods clocked sales of ₹2,407 Crore and profit after tax was ₹150 crore. “In these challenging times, Heritage Foods continues to enhance its profitability by reducing debt. The contribution of value-added product portfolio is growing with the foray into the new ready-to-eat, heat-and-eat segment. We expect this to grow from about 27.4 per cent in Q1 to about 45-50 per cent,” says Brahmani.

Heritage has also focussed on pushing its brand recall higher through franchisee operated parlours. It has over 859 parlours and 32 distribution centres besides an omni channel network.

Farmer connect

Teaming up with Novandie through Heritage Novandie Foods, a 50:50 JV company in partnership with France’s Andros group. New products are planned. Heritage Novandie has forayed into yoghurt production in Maharashtra and introduced Mamie Yova branded French Yogurt along with ‘Yo Pop,’ a drinkable yoghurt in Mumbai, Pune, Surat, Ahmedabad and Hyderabad.

Even as it is strengthening the brand on the consumer side, Brahmani points to the enormous backward linkages Heritage has done. It had commenced its agri-division in 2008 and built a connect with lakhs of farmers.

The company facilitates financial support for cattle purchase and cattle insurance, resulting in cattle yields rising over the past few years and creating potential employment generation.

“By maintaining a strong relationship with over 0.3 million dairy farmers, Heritage Foods has gained the milk processing capacity of 2.7 MLPD,” she explains.

Pushing Procurement

The Company’s milk procurement capacity stands at 1.3 MLPD from a strong network of 0.3 million milk farmers based in 8 states. The company has 11,514 milk procurement representatives collecting milk twice a day from the milk farmers. It has a milk chilling capacity of 2.1 MLPD.

The milk procured is handled through 18 facilities that together have a processing capacity of 2.7 MLPD and packaging capacity of 1.7 MLPD and 742 MTPD curd packaging capacity.

Strengthening its product offering, the company launched flavoured milk in 2017 and later the Alpenvie ice-cream range.

‘Grass to Glass’ approach

“We deployed SAP ERP system which provides us with a single window overview of the company. The procurement system has been digitally automated,” she explains. “The company is professionally managed. We on-boarded two CEOs, Srideep Nair Kesavan for Heritage Foods and Vinay Vatal for Heritage Nutrivet, to strengthen the company’s milk and milk products business as well the growing focus towards cattle feed and nutrition business,” she said. Taking this legacy forward, the company plans to prudently invest in village-level milk collection infrastructure, bulk coolers, chilling centres and processing capacity. The target is to achieve 20 per cent YoY topline growth for the next 3-5 years.

But the ₹11,357 billion dairy sector, which is dominated by Amul and other cooperatives, is a crowded field — there are several private players with the same ambitions as Heritage. For context, look at another southern major Hatsun Agro which had revenues of ₹5570 crore in FY 2021. Brahmani is however pretty bullish.

V Rishi Kumar

Published on August 08, 2021

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