Retail major Future and global dairy exporter Fonterra agreed to enter a 50-50 joint venture on Wednesday on which Kishore Biyani, the chief executive officer of Future, said the company will be using the three types of methods for expanding its dairy business.

The three methods of expanding the business are small store and big format, general trade models and subscription-based models. "Partnership with Fonterra is of equals and it is to build develop and scale up our dairy business," Biyani said in an interview with CNBC-TV18.

On how the joint venture will go about, he said the two companies are planning to take to third-party manufacturing for building the products with the aim of expanding customer reach and care 'more about value than the price'.

Biyani believes that there is a lot of scope in the dairy business. "Dairy can easily make up 10-12 percent of sales in stores once there is a consistency of products," he said, adding that the company does not have a revenue target for the business.

“It's a segment where consumers indulge over 3-4 times a day. We will merge our existing Nilgiris dairy business into the new firm,” said Kishore Biyani, the chief executive officer of Future Group, told The Economic Times.

Fonterra, a New Zealand dairy company, is two times bigger than that of India's co-operative dairymaker Amul.

The New Zealand origin co-operation was formed after two co-operatives - Kiwi Co-operative Dairies and New Zealand Dairy Group - merged with the New Zealand Dairy Board in 2001.

Though it entered India through a joint venture with Britannia, it exited the deal in 2007. "Fonterra story ended with Britannia long ago," Biyani confirmed.

Future Consumer (FCL), the group's retail arm which operates Big Bazaar, had earlier signed deals with south India's well-known grocery chain Nilgiris, Heritage and Easy Days in order to expand its business in the dairy market.

On the results of the subsidiary, he said that the company has launched many new products at FCL and the Goods and Services Tax (GST) adjusted growth stands at 30 percent.

"The company is already profitable on a standalone business and we expect to end this fiscal at a growth of 40-45 percent," Biyani said, adding that the fiscal end should have close to 2000 FCL stores.

On store expansion, Biyani said that the company will be reaching three small stores a day and expects to move up to six small stores a day by the next year.

Biyani's group has been on the lookout for expanding their business online. On the recent draft e-commerce policy, Biyani said that there is a need for a retail policy rather than an e-commerce policy as 'retail is a medium to reach the consumer - physical and digital retail and should not be differentiated'.

First Published:Aug 8, 2018 4:33 PM IST