As Amul, the Gujarat-based dairy giant, prepares to expand its presence in Tamil Nadu, state-run cooperative Aavin is launching a significant capacity upgrade to secure its market position in Chennai. The Tamil Nadu government has confirmed plans to increase Dairies ’ daily milk supply potential in the city, from 11 lakh litres to 22 lakh litres by March 2026.
Two large-scale dairy processing units are under development:
- Madhavaram Dairy: 10 lakh litres/day capacity
- Acharapakkam Dairy: 1 lakh litres/day capacity
These facilities will significantly boost Amul’s production capacity at a time when Chennai’s dairy demand is surging, and private brands are commanding higher prices and market share. Amul’s Expansion Sparks Competitive Pressure
Amul has already entered the Chennai market with curd products and recently announced plans to roll out fresh milk via its Chittoor plant gradually. This expansion has triggered a strategic response from Aavin, which aims to retain its consumer base and respond to market dynamics.
Chennai Milk Price Comparison – Aavin vs Private Brands
Despite being more affordable, Aavin products trail in visibility and accessibility. A comparative look at retail prices:
- Toned Milk: Aavin ₹40/litre | Private brands ₹49/litre
- Standardized Milk: Aavin ₹44/litre | Private brands ₹57/litre
- Full Cream Milk: Aavin ₹60/litre | Private brands ₹65/litre
Consumer feedback points to supply mismatches—popular variants, Aavin’s “Green” Magic standardised milk are limited to monthly cardholders, while less preferred types are pushed in retail channels.
Operational & Environmental Upgrades at Ambattur Dairy
Environmental compliance is also in place at Favin’s Ambattur facility, which was previously flagged for polluting Korattur Lake, as it undergoes a sewage treatment plant upgrade, from 3.3 lakh litres/day to 7 lakh litres/day. The new system, certified by IIT Madras, is expected to be operational by the end of 2025. Approvals from the Tamil Nadu Pollution Control Board are currently in process.
Farmer Incentives and Dealer Commission Requests
To support dairy farmers, Aavin has credited ₹342.14 crore in procurement incentives since December 2023 through cooperative unions. Meanwhile, milk dealers have requested a revision of the commission rates, currently set at ₹ 1.50/litre for retail and ₹2/litre for wholesale. Aavin has stated that these will be reviewed during the subsequent milk price restructuring. Chennai’s Dairy Landscape: What Lies Ahead?
As Chennai’s dairy market intensifies, Aavin’s ability to expand capacity, align product offerings with consumer demand, and maintain affordability will be critical. Strategic infrastructure investments, environmental accountability, and producer support are positioning Aavin better to withstand the rising influence of private players like Amul.
