It’s hard to find anyone in Bangladesh who hasn’t heard the name “Milk Vita.” Once a top player in Bangladesh’s dairy industry, this brand used to meet almost all of the dairy needs of the nation.
Milk Vita, a state-owned brand managed by the Bangladesh Milk Producers Cooperative Union Ltd., used to dominate the liquid milk and dairy market. However, since the early 2000s, it has gradually lost its footing.
Where Milk Vita once held a dominant position in Bangladesh’s liquid milk and dairy market, today it controls only about 40% of the industry. Meanwhile, private dairy companies have claimed about 60% of the market over the last two decades.
At its peak, Milk Vita used to process 450,000 liters of milk daily, but now its daily processing capacity has dropped to just 280,000 liters. What went wrong for Milk Vita to fall so far behind?
Overview
In 1946, with the goal of supplying milk and dairy products to Kolkata, the National Nutrition Company was founded in Lahiri Mohanpur, now in Sirajganj district. The company initially aimed to buy milk at a nominal price from the Pabna-Sirajganj region and supply dairy products to the Kolkata market.
They even brought in machinery to set up a plant capable of processing 2,000 liters of milk daily. However, the 1947 partition of India halted these plans. In 1948, the plant was acquired by Mr. Mokhlesur Rahman, who renamed it Eastern Milk Products and resumed construction, which was completed in 1952.
The plant produced milk, ghee, butter, and other dairy products under the brand Milk Vita, catering to the Kolkata market. In 1966, the brand adopted a cooperative model and was renamed Eastern Milk Producers Cooperative Union Ltd. Yet, due to initial struggles, the Cooperative Marketing Society took over in 1968.
Around the same time, the cooperative society acquired the defunct ‘Astor Dairy’ in Tejgaon, Dhaka, and began supplying milk and dairy products under the Milk Vita name. However, the Cooperative Marketing Society also struggled with effective management, and both plants eventually ceased production and marketing activities in the early 1970s.
After Bangladesh gained independence, to address food security, nutrition, economic recovery, and the socio-economic upliftment of rural farmers, a project called the Cooperative Dairy Project was initiated in 1973, modeled after India’s Amul Cooperative and recommended by UNDP and the Danish International Development Agency (DANIDA).
With more than BDT 130 million in government loans, factories were established in five regions to support dairy farmers and increase milk production. Under the plan, milk surplus areas supplied milk to cooperative societies, which then processed the milk at plants into pasteurized milk and dairy products such as butter, ghee, and powdered milk.
These products were marketed under the Milk Vita brand. In 1977, the name was officially changed to Bangladesh Milk Producers Cooperative Union Ltd. With government backing, Milk Vita initially grew rapidly, ensuring fair prices for dairy farmers and providing quality milk and dairy products in urban areas.
By 1980, Milk Vita had established itself as a leading dairy brand in Bangladesh, with an extensive network of farmers, processing plants, and distribution channels across the country. During this period, millions of Bangladeshis relied on Milk Vita for their daily milk needs, as the brand processed approximately 450,000 liters of milk daily, securing its top position in the market.
However, in the 1990s, cracks began to appear in Milk Vita’s operations. Changes in cooperative leadership led to management inefficiencies and transparency issues. Corruption and mismanagement plagued the brand, with allegations of misusing funds dedicated to modernizing processing facilities.
Delays in upgrading these facilities and inefficiencies in the distribution network negatively impacted Milk Vita’s operations. Around this time, private dairy companies like Pran, Aarong Dairy, and Akij Dairy began to quickly capture the market with advanced technology and new dairy products.
By the early 2000s, Milk Vita’s problems had intensified. In 2002, a milk contamination incident severely tarnished the brand’s reputation. Facing public outrage, Milk Vita temporarily withdrew its products from the market. Although operations eventually resumed, private dairy companies had already stepped in to fill the market gap. These companies gained consumer trust with modern technology and improved packaging. Leveraging their logistics capabilities, private dairy companies solidified their market position.
By 2010, private dairy companies began diversifying their product offerings in line with evolving consumer preferences. They adopted competitive pricing, aggressive marketing, and distribution strategies. While private dairy farms focused on diversified product lines, aggressive marketing, and distribution strategies, Milk Vita continued relying on government subsidies to stay afloat. By 2018, Milk Vita had become more restricted in operations, eventually closing several plants. At this point, its daily milk collection had dropped to 280,000 liters.
Why is Milk Vita Failing?
Milk Vita started with a mission to increase production for Bangladesh’s dairy farmers, improve rural socio-economic conditions, and supply high-quality milk and dairy products to urban areas. To this end, it produced pasteurized milk, along with products like butter, yogurt, ghee, and milk powder.
However, in the 1990s, private dairy companies entered the market, heavily investing in state-of-the-art dairy processing technology and enhancing their supply chains for maximum efficiency.
With strategic visions to capture the dairy market, these companies also focused on diversifying their product lines. By the mid-2000s, Bangladeshi consumers’ preferences began to change. Along with regular milk, the demand for value-added dairy products like flavored milk, yogurt drinks, and cheese increased.
Private brands like Pran, Aarong Dairy, and Akij Dairy began targeting this middle-class demographic, introducing products like chocolate milk, lassi, and buttermilk. These private companies quickly accelerated the shift in consumer preferences by aggressively expanding their product lines, while Milk Vita struggled to keep pace, eventually falling behind in competition.
Outdated Technology & Poor Infrastructure
In the 1990s, private companies investing in Bangladesh’s dairy sector prioritized modern refrigeration systems, automated production lines, and improved packaging. Companies like Akij, Pran, and Aarong used cold chain logistics to ensure milk quality from collection to processing, even introducing Ultra-High Temperature (UHT) technology.
In contrast, Milk Vita continued relying on outdated machinery, with equipment from the 1980s that has now aged over three decades. Although BDT 800 million was allocated in 2014 to modernize Milk Vita’s machinery, bureaucratic delays and corruption led to most of the funds being misused.
Due to the lack of essential modernization in Milk Vita’s processing plants, its production capacity decreased and concerns arose over the quality of its products due to outdated machinery, hindering product line diversification. Additionally, maintenance costs to keep these machines running escalated. A 2019 report highlighted significant losses of milk daily due to inefficiency; approximately 12% of collected milk spoiled during transportation. Outdated machinery and an inefficient supply chain meant Milk Vita couldn’t effectively enter the value-added dairy segment.
Bureaucratic Inefficiency & Corruption
A lack of product diversification, strategic vision, and failure to invest in modernization were largely due to bureaucratic inefficiency and corruption. Since the late 1990s, bureaucratic hurdles and corruption have obstructed Milk Vita’s operations and modernization efforts. A 2020 Transparency International Bangladesh report revealed that over 40% of senior management positions at Milk Vita were politically appointed. Many of these politically backed officials lacked the necessary expertise to run a large-scale cooperative like Milk Vita. Regardless of which political party was in power, Milk Vita, like many government institutions, was controlled by politically appointed individuals. Their incompetence led to skyrocketing operational costs, and the once profitable company became reliant on government subsidies. In 2014, the government allocated BDT 800 million to modernize Milk Vita’s processing plants and supply chain. The aim was to revive Milk Vita’s operations and help it compete with private companies. However, by 2019, most planned modernization projects were stalled, leaving Milk Vita’s infrastructure largely unchanged due to significant fund misallocation to politically connected entities through overpriced tenders. By 2020, Milk Vita’s plants operated at less than half their capacity, and the company incurred losses of BDT 4-5 per liter of milk processed.
Lack of Fair Pricing & Payment Delays
One of Milk Vita’s foundational goals was to ensure fair pricing for rural dairy farmers. Yet, over the past decade, it failed to honor this promise. Since the mid-2010s, Milk Vita began delaying payments to farmers regularly. In a 2020 survey by the Bangladesh Dairy Farmers Association (BDFA), over 60% of farmers supplying Milk Vita reported payment delays of up to six months. These delays created a significant financial strain on small farmers who rely on this income to cover essential expenses, such as feed, veterinary care, and farm maintenance. In addition to delays, Milk Vita also lagged in offering competitive prices. By 2018, Milk Vita paid farmers BDT 35-40 per liter, whereas private companies like Pran and Aarong Dairy paid up to BDT 45-50 per liter. This price gap, coupled with payment delays, forced many farmers associated with Milk Vita to sell to private company agents, weakening Milk Vita’s supply chain and reducing milk collection volumes. From its peak collection of 450,000 liters daily in the early 2000s, Milk Vita’s daily collection fell to just 280,000 liters by 2020.
Lack of Marketing & Branding
Another reason behind Milk Vita’s decline is its lack of focus on marketing and branding. As a government-supported entity, Milk Vita was already a well-known brand as Bangladesh’s top pasteurized milk provider. This recognition led officials to neglect branding and marketing. Conversely, brands like Pran, Aarong, and Akij emphasized branding and marketing from the start. Their advertisements highlighted product quality, health benefits, and modern production methods, which quickly resonated with consumers. In contrast, Milk Vita frequently faced quality issues, even resulting in temporary distribution suspensions imposed by the courts. Despite this, Milk Vita took minimal steps to restore its reputation through marketing and branding, leaving it less appealing, especially to younger consumers.
Milk Vita, once a leader in Bangladesh’s dairy industry and a provider of most of the country’s dairy needs, has significantly lagged since the early 2000s. Today, the company holds only 40% of the market share, down from a dominant position in the liquid milk and dairy product market. Once capable of processing 450,000 liters of milk daily, Milk Vita’s daily processing capacity has now dropped to 280,000 liters. So, what went wrong, and why has Milk Vita continuously fallen behind?
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