Nilgiris: From butter biz to pioneer in modern retail

Vinay Kamath Chennai | Updated on November 21, 2014

BL22_03_NILGIRIS   -  The Hindu

In 1905, Muthuswami Mudaliar, a mail runner, used to carry butter and dairy products from the foothills of the Nilgiris, from Mettupalayam, to the Engish living in the hill stations of Ooty and Coonoor.

Later, after acquiring a butter business from an Englishman, Mudaliar moved to Ooty in 1922 and then to Brigade Road in Bengaluru in 1936, where the Nilgiris supermarkets story really began.

In many ways, Nilgiris was a forerunner of the organised retail chains one sees today which had to do with the visit of Mudaliar’s son, Chenniappan, to the US where he saw the supermarket model at work.

In 1945, Nilgiris revamped its Brigade road store to set up a milk and ice cream parlour and added grocery and general merchandise to its portfolio in addition to the bakery and confectionery it was selling. Perhaps it was the first ‘modern’ retail store which also had its own private label with its dairy products.

Its dairy offerings were further enhanced with the setting up of a dairy at Erode in Tamil Nadu in 1962. In 1971, its stores moved to the self-service format. At present, Nilgiris produces, procures and processes 50,000 litres of milk a day, a bulk for its own dairy products, and sells milk in some markets.

In 2006, the family owning Nilgiris sold a majority of its stake to private equity fund Actis. Actis owned 67 per cent, while a section of the family retained the rest of the stake. Actis brought in professional CEOs to run the business and the past eight years also saw rapid expansion.

In September, Nilgiris opened its 141st store in a new location on Chennai’s Radhakrishnan Salai, where it ran a store for 32 years before the erstwhile store closed down. Five more stores are due to open, three in Tamil Nadu and two in Karnataka.

Today, Nilgiris has a strong private label in foods, which constitute 30 per cent of its turnover in the foods category. Dairy products constitute 30 per cent of the chain’s overall sales. The chain has followed a franchisee model of expansion where franchisees pay royalty for use of the Nilgiris brand and stock their stores through a central purchasing model.

The chain totted up overall revenues of ₹765 crore for the year ended March 2014. Mudaliar could never have imagined his small butter business would one day be a pioneer in modern retail.

Published on November 21, 2014

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