Shimla Dairy

Introduction: The case examines the market for cheese products in India & how Shimla Dairy Products fits into the picture - where it stands & what are the various challenges it faces in the fast changing market.

The Indian cheese industry is still in its infancy but with potential for immense growth. The market for branded cheese is valued at Rs. 1.8 Bn. Some of the major competitors of Shimla Dairy Products are:

* Amul * Britannia * Verka

* DaBon Intl. * Nandini * Vadilal

The case draws attention to the fact that due to immense potential the players are looking to expand their product variants & capacities & market aggressively.

The Company: Shimla Dairy Products is a 30 year old Shimla based dairy company with two plants & pan India operations. It is into producing various types of Cheese variants for Indian cheese market. Shimla Dairy Products has been experiencing 15-20% growth YoY.

Production & Sales: Shimla Dairy Products has two plants with a total cold storage capacity of 12 T. The peak production season for the firm is in monsoon & the peak sales season is during summer. Considering all the natural, processed & premium cheese variants, Shimla produced 29 different varieties in total. Production in peak months can go up to 22 T. The company has introduced double shift operations in its plants.

Pricing: The Company has had its hand across the entire price spectrum. Its premium variant - Parmesan commanded a price of up to Rs. 2,500 per Kg & was imported in bulk by 5 Star Hotels. Its least expensive variant consisted of low end type cheese, which was priced at Rs. 125 per Kg. The company gets a 20% margin from high end products & standard products are priced at 15% margin.

Promotion: Shimla Dairy has had a rudimentary marketing strategy - mainly driven by word of mouth. However it has slowly started being more aggressive by making use of flyers & promotional giveaways.

Distribution: Company's sales are distributer driven - with each distributer given exclusive access to the cities/territories. The various avenues for sale are hotels, restaurants, retail outlets, & of - late, fast food joints. It also sells its products via select specialty shops like "The Cheese Shop" in Shimla & "The Cheese & Wine Shop" in Bangalore.

Challenges: Shimla Dairy enjoys very good reputation & offers quality & variety of products. Considering the forthcoming changes in the industry, some of the challenges in front of the management are:

* Should the company focus on exploring a particular niche

* Which geographical areas should the company focus on

* What customer type should the company focus on