Amul was set up in 1946 and its full form is Anand Milk- producers Union Ltd. The Brand Amul is a movement in dairy cooperative in India. The management of the brand name is done by the Gujarat Co- operative Milk Marketing Federation Ltd (GCMMF) which is a cooperative organization.

Location

Amul is located in the town Anand which is in the state of Gujarat and it has set up itself as a model for development in the rural areas. For Amul Brand has started the Revolution White of India which has helped to make the country the biggest manufacturer of milk and its by products in the whole world. Amul has around 2.6 million producer members and the total capacity for handling milk is around 10.16 million liters every day. The brand's capacity for milk drying is around 594 Mts. each day and its capacity for cattle feed manufacturing is about 2640 Mts. each day.

Product Portfolio

Amul is the biggest brand in the pouched milk sector in the world and in India it is the biggest food brand. Amul's range of products includes milk, ghee, milk powders, curd, ice cream, paneer, cream, chocolate, cheese, butter, and shrikhand.

Brand Umbrella

The various brands of Amul's bread spreads are Amul Lite, Amul Butter, and Delicious Table Margarine.

The Brand Amul's milk drinks are sold under various names such as Amul Kool, Amul Kool Cafe, Kool Koko, Amul Kool Chocolate Milk, and Amul Masti Spiced Buttermilk.

Amul's powder milk are sold under many names like Amulya Dairy Whitener, Sugar Tea Coffee Whitener, Sugar Skimmed Milk Powder, and Amul Instant Full Cream Milk Powder.

The brand's cheese are also sold under various names such as Gouda Cheese, Amul Cheese Spreads, and Amul Emmental Cheese.

Amul Brand's desserts are sold under many names like Amul Basundi, Amul Lassee, Gulab Jamun Mix, Amul Shrikhand, and Amul Ice Creams.

Business Markets

Amul exports its products to various countries such as USA, Australia, Mauritius, China, Hong Kong, Singapore, UAE, and Bangladesh.

Awards

The Food Brand Amul has received various awards such as the Ramkrishna Bajaj National Quality Award in 2003, Award International Cio 1000 for Resourcefulness, and also the Rajiv Gandhi National Quality Award in 1999.

Company Financials

The sales turnover of the Brand Amul :Sales Turnover Figures

Year Rs (million) US $ (in million)

1999-00 22185 493

2000-01 22588 500

2001-02 23365 500

2002-03 27457 575

2003-04 28941 616

2004-05 29225 672

2005-06 37736 850

2006-07 42778 1050

2007-08 52554 1325

2008-09 67113 1504

Sales Turnover Rs (million) US $ (in million)1994-95 11140 3551995-96 13790 4001996-97 15540 4501997-98 18840 4551998-99 22192 493s1999-00 22185 4932000-01 22588 5002001-02 23365 5002002-03 27457 5752003-04 28941 6162004-05 29225 6722005-06 37736 8502006-07 42778 10502007-08 52554 13252008-09 67113 1504

AWARDS:-Amul a co-operative society and its co-operation has led many different awards in its favour.Magsaysay award for community leadership presented in manila.Philippines to Shri Tribhuvandas Patel, Shri D N Khurody and Shri V. Kurien1964: “Padmabhusan” award given to Shri T.K. Patel1965: “Padmshri” awarded was given to V. Kurien, general manager, by the president of India.1987: “Best Productivity” awarded by national productivity council for the year 1985-86 awarded toAmul dairy.1988: “Best Productivity” awarded for the second successive year 1986-87 by the president ofIndia, Mr. R. Venkatrao to kaira union.1993: “ICA” Memenoto towards genuine and self sustaining cooperative worldwide ICA regionaloffice for Asia and pacific, New Delhi, 1996.1999: G.B.Birla award. Moreover the Amul union has achieved the prestigious ISO 9001-2000 andHACCP Certificate and effects are got to obtain ISO 14000.1999: Best of All" Rajiv Gandhi National Quality Award for the year,2003: The Gujarat Co-operative Milk Marketing Federation Ltd. has emerged as the top scorer inthe service category of the prestigious IMC Ramkrishna Bajaj National Quality Award.2006-07: GCMMF has bagged award for excellent performance in exports of dairy products fromAgricultural and Processed Food Exports Development Authority (APEDA).2007: Amul Pro-Biotic Ice-cream Gets No. 1 Award At World Dairy Summit.

Type : CooperativeFounded: 1946Headquarters: Anand, IndiaIndustry: DairyRevenue: $868 million USD (06-07)Employees: 2.41 million milk producers.HISTORYGujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest foodproducts marketing organisation. It is a state level apex body of milk cooperatives inGujarat which aims to provide remunerative returns to the farmers and also serve theinterest of consumers by providing quality products which are good value for moneyAmul (Anand Milk-producers Union Limited), formed in 1946, is a dairy cooperativemovement in India. The brand name Amul, sourced from the Sanskrit word Amoolya,means priceless. It was suggested by a quality control expert in Anand. It is a brand namemanaged by an apex cooperative organisation, Gujarat Co-operative Milk MarketingFederation Ltd. (GCMMF), which today is jointly owned by some 2.41 million milkproducers in Gujarat, India[1]. It is based in Anand town of Gujarat and has been a sterlingexample of a co-operative organization's success in the long term. The Amul Pattern hasestablished itself as a uniquely appropriate model for rural development. Amul hasspurred the White Revolution of India, which has made India the largest producer of milkand milk products in the world. It is also the world's biggest vegetarian cheese brand [2].Amul's product range includes milk powders, milk, butter, ghee, cheese, curd, chocolate,ice cream, cream, shrikhand, paneer, gulab jamuns, basundi, Nutramul brand and others.Situation of farmersOver five decades ago, the life of an average farmer in Kheda District was very much likethat of his/her counterpart anywhere else in India. His/her income was derived almostentirely from seasonal crops. The income from milk buffaloes was undependable. Milkproducers had to travel long distances to deliver milk to the only dairy, the Polson Dairyin Anand – often milk went sour, especially in the summer season, as producers had tophysically carry milk in individual containers. Private traders and middlemen controlledthe marketing and distribution system for the milk. These middlemen decided the pricesand the off-take from the farmers by the season. As milk is perishable, farmers were

compelled to sell it for whatever they were offered. Often, they had to sell cream andghee at throw-away prices. In this situation, the private trader made a killing. Moreover,the government at that time had given monopoly rights to Polson Dairy (around that timePolson was the most well known butter brand in the country) to collect milk from Anandand supply to Bombay city in turn (about 400 kilometers away). India ranked nowhereamongst milk producing countries in the world in 1946. Gradually, the realizationdawned on the farmers with inspiration from then nationalist leaders Sardar VallabhbhaiPatel (who later became the first Home Minister of free India) and Morarji Desai (wholater become the Prime Minister of India) and local farmer, freedom fighter and socialworker Tribhovandas Patel, that the exploitation by the trader could be checked only ifthey marketed their milk themselves. Amul was the result of the realization that theycould pool up their milk and work as a cooperative.INDIAN DAIRY INDUSTRY:Today, India is 'The Oyster' of the global dairy industry. It offers opportunities galore toentrepreneurs worldwide, who wish to capitalize on one of the world's largest and fastestgrowing markets for milk and milk products. A bagful of 'pearls' awaits the internationaldairy processor in India. The Indian dairy industry is rapidly growing, trying to keep pacewith the galloping progress around the world. As he expands his overseas operations toIndia many profitable options await him. He may transfer technology, sign joint venturesor use India as a sourcing center for regional exports. The liberalization of the Indianeconomy beckons to MNC's and foreign investors alike.India’s dairy sector is expected to triple its production in the next 10 years in view ofexpanding potential for export to Europe and the West. Moreover with WTO regulationsexpected to come into force in coming years all the developed countries which are amongbig exporters today would have to withdraw the support and subsidy to their domesticmilk products sector. Also India today is the lowest cost producer of per litre of milk inthe world, at 27 cents, compared with the U.S' 63 cents, and Japan’s $2.8 dollars. Also to

take advantage of this lowest cost of milk production and increasing production in thecountry multinational companies are planning to expand their activities here. Some ofthese milk producers have already obtained quality standard certificates from theauthorities. This will help them in marketing their products in foreign countries inprocessed form.The urban market for milk products is expected to grow at an accelerated pace of around33% per annum to around Rs.43,500 crores by year 2005. This growth is going to comefrom the greater emphasis on the processed foods sector and also by increase in theconversion of milk into milk products. By 2005, the value of Indian dairy produce isexpected to be Rs 10,00,000 million. Presently the market is valued at aroundRs7,00,000mnIndia with 134mn cows and 125mn buffaloes, has the largest population of cattle in theworld. Total cattle population in the country as on October'00 stood at 313mn. More thanfifty percent of the buffaloes and twenty percent of the cattle in the world are found inIndia and most of these are milch cows and milch buffaloes.Indian dairy sector contributes the large share in agricultural gross domestic products.Presently there are around 70,000 village dairy cooperatives across the country. The cooperativesocieties are federated into 170 district milk producers unions, which is turn has22-state cooperative dairy federation. Milk production gives employment to more than72mn dairy farmers. In terms of total production, India is the leading producer of milk inthe world followed by USA. The milk production in 1999-00 is estimated at 78mn MT ascompared to 74.5mn MT in the previous year. This production is expected to increase to81mn MT by 2000-01. Of this total produce of 78mn cows' milk constitute 36mn MTwhile rest is from other cattle.While world milk production declined by 2 per cent in the last three years, according toFAO estimates, Indian production has increased by 4 per cent. The milk production inIndia accounts for more than 13% of the total world output and 57% of total Asia'sproduction. The top five milk producing nations in the world are India ,USA, Russia,Germany and France.THREE-TIER “AMUL MODEL”:The Amul Model is a three-tier cooperative structure. This structure consists of a DairyCooperative Society at the village level affiliated to a Milk Union at the District level

which in turn is further federated into a Milk Federation at the State level. The abovethree-tier structure was set-up in order to delegate the various functions, milk collection isdone at the Village Dairy Society, Milk Procurement & Processing at the District MilkUnion and Milk & Milk Products Marketing at the State Milk Federation. This helps ineliminating not only internal competition but also ensuring that economies of scale isachieved. As the above structure was first evolved at Amul in Gujarat and thereafterreplicated all over the country under the Operation Flood Programme, it is known as the‘Amul Model’ or ‘Anand Pattern’ of Dairy Cooperatives.Responsible for Marketing of Milk & Milk Products Responsible for Procurement &Processing of Milk Responsible for Collection of Milk Responsible for Milk Production3.1 Village Dairy Cooperative Society (VDCS):The milk producers of a village, having surplus milk after own consumption, cometogether and form a Village Dairy Cooperative Society (VDCS). The Village DairyCooperative is the primary society under the three-tier structure. It has membership ofmilk producers of the village and is governed by an elected Management Committeeconsisting of 9 to 12 elected representatives of the milk producers based on the principleof one member, one vote. The village society further appoints a Secretary (a paidemployee and member secretary of the Management Committee) for management of theday-to-day functions. It also employs various people for assisting the Secretary inaccomplishing his / her daily duties. The main functions of the VDCS are as follows: Collection of surplus milk from the milk producers of the village & paymentbased on quality & quantity Providing support services to the members like Veterinary First Aid, ArtificialInsemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seedsales, conducting training on Animal Husbandry & Dairying, etc. Selling liquid milk for local consumers of the village Supplying milk to the District Milk UnionThus, the VDCS in an independent entity managed locally by the milk producers andassisted by the District Milk Union.3.2 District Cooperative Milk Producers’ Union(Milk Union)The Village Societies of a District (ranging from 75 to 1653 per Milk Union in Gujarat)having surplus milk after local sales come together and form a District Milk Union. TheMilk Union is the second tier under the three-tier structure. It has membership of VillageDairy Societies of the District and is governed by a Board of Directors consisting of 9 to18 elected representatives of the Village Societies. The Milk Union further appoints a

professional Managing Director (paid employee and member secretary of the Board) formanagement of the day-to-day functions. It also employs various people for assisting theManaging Director in accomplishing his / her daily duties. The main functions of theMilk Union are as follows: Procurement of milk from the Village Dairy Societies of the District Arranging transportation of raw milk from the VDCS to the Milk Union. Providing input services to the producers like Veterinary Care, ArtificialInsemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seedsales, etc. Conducting training on Cooperative Development, Animal Husbandry &Dairying for milk producers and conducting specialised skill development &Leadership Development training for VDCS staff & Management Committeemembers. Providing management support to the VDCS along with regular supervision of itsactivities.3.3 State Cooperative Milk Federation(Federation):The Milk Unions of a State are federated into a State Cooperative Milk Federation. TheFederation is the apex tier under the three-tier structure. It has membership of all thecooperative Milk Unions of the State and is governed by a Board of Directors consistingof one elected representative of each Milk Union. The State Federation further appoints aManaging Director (paid employee and member secretary of the Board) for managementof the day-to-day functions. It also employs various people for assisting the ManagingDirector in accomplishing his daily duties. The main functions of the Federation are asfollows: Marketing of milk & milk products processed / manufactured by Milk Unions. Establish distribution network for marketing of milk & milk products. Arranging transportation of milk & milk products from the Milk Unions to themarket. Creating & maintaining a brand for marketing of milk & milk products (brandbuilding). Providing support services to the Milk Unions & members like Technical Inputs,management support & advisory services. Pooling surplus milk from the Milk Unions and supplying it to deficit MilkUnions.PRODUCTAMUL BUTTER : ‘UTTERLY BUTTERLY DELICIOUS’AMUL BUTTER was the first product which was officially launched by AMUL in 1945.It has been a market leader during the last 4 decades.

AMUL BUTTER is made from Butter, Common Salt, permitted natural colour- AnnattoComposition:Milk Fat 80%Moisture 16%Salt 2.5%Curd 0.8%Calorific Value:720 kcal/100gSpecial Features:Made from fresh cream by modern continuous butter making machines. Marketed inIndia since 4 decades.Product Specification:Meets AGMARK standard and BIS specifications No.IS:13690:1992Products Marketed:Breadspreads:Amul ButterAmul Lite Low Fat BreadspreadAmul Cooking ButterCheese Range:Amul Pasteurized Processed Cheddar CheeseAmul Processed Cheese SpreadAmul Pizza (Mozarella) CheeseAmul Shredded Pizza CheeseAmul Emmental CheeseAmul Gouda CheeseAmul Malai Paneer (cottage cheese)Utterly Delicious PizzaMithaee Range (Ethnic sweets):Amul Shrikhand (Mango, S affron, Almond Pistachio, Cardamom)Amul AmrakhandAmul Mithaee GulabjamunsAmul Mithaee Gulabjamun MixAmul Mithaee Kulfi MixAvsar LadoosUHT Milk Range:Amul Shakti 3% fat MilkAmul Taaza 1.5% fat MilkAmul Gold 4.5% fat MilkAmul Lite Slim-n-Trim Milk 0% fat milkAmul Shakti Toned MilkAmul Fresh CreamAmul Snowcap Softy MixPure Ghee:Amul Pure GheeSagar Pure GheeAmul Cow GheeInfant Milk Range:Amul Infant Milk Formula 1 (0-6 months)Amul Infant Milk Formula 2 ( 6 months above)

Amulspray Infant Milk FoodMilk Powders:Amul Full Cream Milk PowderAmulya Dairy WhitenerSagar Skimmed Milk PowderSagar Tea and Coffee WhitenerSweetened Condensed Milk:Amul Mithaimate Sweetened Condensed MilkFresh Milk:Amul Taaza Toned Milk 3% fatAmul Gold Full Cream Milk 6% fatAmul Shakti Standardised Milk 4.5% fatAmul Slim & Trim Double Toned Milk 1.5% fatAmul Saathi Skimmed Milk 0% fatAmul Cow MilkCurd Products:Yogi Sweetened Flavoured Dahi (Dessert)Amul Masti Dahi (fresh curd)Amul Masti Spiced Butter MilkAmul LasseeAmul Icecreams:Royal Treat Range (Butterscotch, Rajbhog, Malai Kulfi)Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza, RoastedAlmond)Nature's Treat (Alphanso Mango, Fresh Litchi, Shahi Anjir, Fresh Strawberry,Black Currant, Santra Mantra, Fresh Pineapple)Sundae Range (Mango, Black Currant, Sundae Magic, Double Sundae)Assorted Treat (Chocobar, Dollies, Frostik, Ice Candies, Tricone, Chococrunch,Megabite, Cassatta)Utterly Delicious (Vanila, Strawberry, Chocolate, Chocochips, Cake Magic)Chocolate & Confectionery:Amul Milk ChocolateAmul Fruit & Nut ChocolateBrown Beverage:Nutramul Malted Milk FoodMilk Drink:Amul Kool Flavoured Milk (Mango, Strawberry, Saffron, Cardamom, Rose,Chocolate)Amul Kool CafeAmul Kool KokoAmul Kool Millk Shaake (Mango, Strawberry, Badam, Banana)Health Beverage:Amul Shakti White Milk FoodPRICE: Amul Pricing StrategiesAt the time Amul was formed, consumers had limited purchasing power, and modestconsumption levels of milk and other dairy products. Thus Amul adopted a low-cost pricestrategy to make its products affordable and attractive to consumers by guaranteeing them

value for money.Despite competition in the high value dairy product segments from firms such asHindustan Lever, Nestle and Britannia, GCMMF ensures that the product mix and thesequence in which Amul introduces its products is consistent with the core philosophy ofproviding butter at a basic, affordable price to appeal the common masses. This helpedAMUL BUTTER to create its brand image in the household sector of the society.Rs.87 Rs.18PLACE: A Global DistributorGCMMF is India's largest exporter of Dairy Products. It has been accorded a "TradingHouse" status. GCMMF has received the APEDA Award from Government of India forExcellence in Dairy Product Exports for the last 9 years.Currently Amul has 2.41 million producer members with milk collection average of 5.08million litres/day. Besides India, Amul has entered overseas markets such as Mauritius,UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few SouthAfrican countries. Its bid to enter Japanese market in 1994 had not succeeded, but now ithas fresh plans of flooding the Japanese markets. Other potential markets beingconsidered include Sri Lanka.PROMOTION: Initial Promotional StrategyThe butter, which had been launched in 1945, had a staid, boring image, primarilybecause the earlier advertising agency which was in charge of the account preferred tostick to routine, corporate ads. They didn’t help in creating a brand image of AMULbutter which was their then motive. The image they presented was, well, boring.A brand - Amul – A Taste of IndiaHowever, in 1966, a man named Sylvester daCunha, from the ad agency of ASP, tookover the Amul account. And in 1967 it began, innocently enough. In India, food wassomething one couldn't afford to fool around with. It had been taken too seriously, for toolong. Sylvester daCunha decided it was time for a change of image.Scott Bradbury, the marketing genius behind Nike and Starbucks, once said “ A greatbrand is a story that is never completely told. A brand is a metaphorical story that’sevolving all the time. Stories create the emotional context people need to locatethemselves in the larger experience” He could easily have been talking about the Amulmoppet.The moppet who put Amul on India'sbreakfast tableThe year Sylvester daCunha took over the account, the country saw the birth of acampaign whose charm has endured fickle public opinion, gimmickry and all else. TheAmul moppet, the little girl who created a home in the hearts and minds of millions and

millions of Indians. No easy task. And to be there for almost 34 years!Call her the Friday to Friday star because Every Friday, since 1967, this little girl appearsat billboards, strategically placed all over India, focusing on the item of the week –tongue in cheek, of course. Round eyed, chubby cheeked, winking at you, fromstrategically placed hoardings at many traffic lights. She is the Amul moppet everyoneloves to love (including prickly votaries of the Shiv Sena and BJP). How often have westopped, looked, chuckled at the Amul hoarding and product wrappers with the equallyrecognisable tagline Utterly Butterly Delicious Amul that casts her sometime as the coy,shy Madhuri, a bold sensuous Urmila or simply as herself, dressed in her little polkadotted dress and a red and white bow, holding out her favourite packet of butter.There are no boundaries and nothing is off limits. From the political scene, toentertainment, from local news to international, from sports to stars, she has a line foreverything. Often said to be playing the role of a “social observer with evocative humor”,the billboards became, and still are, a topic of conversation amongst millions. With their“hing-lish” (a combination of Hindi and English) punch-lines, they have won themaximum number of awards in India for any ad campaign ever! This little thumbalina,seems to have the masses, right where she wants them – wanting more of her and ofAmul. No other brand comes close to what Amul has been able to accomplish.ADVERTISINGIts advertising has also started using tongue-in-cheek sketches starring the Amul babycommenting jovially on the latest news or current events. This formed a large chunk ofthe collective memory of us Indians. We grew with them as the ads grew with us. Theyare quirky, poke fun at no one in particular and are pure eye-candy! We almost admirethe speed with which the ad-people come up with copy and illustration for the ads, thatchange every few days!!From the Sixties to the Nineties, the Amul ads have come a long way. While most peopleagree that the Amul ads were at their peak in the Eighties they still maintain that theAmul ads continue to tease a laughter out of themThe Amul ads are one of the longest running ads based on a theme, now vying for theGuinness records for being the longest running ad campaign ever.Where does Amul's magic actually lie?

Many believe that the charm lies in the catchy lines. That we laugh because the humour iswhat anybody would enjoy. They don't pander to your nationality or certain sentiments. Itis pure and simple, everyday fun.BRANDINGThe first products with the Amul brand name were launched in 1955. Since then, theyhave been in use in millions of homes in all parts of India, and beyond. There issomething more, though, that makes the Amul brand special and that something is thereason for the commitment to quality and value for money. Amul is the brand name of 2million farmers, members of 10,000 village dairy cooperative societies throughoutGujarat. This is the heart of Amul, it is what gives strength to Amul, and it is what is sospecial about the Amul saga.The Amul Pattern has established itself as a uniquely appropriate model for ruraldevelopment. Amul has made India one of the largest milk producers in the world.Amul, therefore, is a brand with a difference. That difference manifests itself in a largerthan life purpose. The purpose – freedom to farmers by giving total control overprocurement, production and marketing.Our commitment to the producer and our contract with the consumer is the reasons weare confident that cooperative brands, like Amul, will have an even bigger role to play inthe next fifty years.SegmentationWide range of product categories caters to consumers across all market segments.For example, Amul Kool is targeted at children, while teenagers prefer Kool Café,as it has a cool imagery associated with it.Segmentation is not as easy in curd and low fat products, due to mixed audiences,various culinary applications , eg. ghee, butter and cheese.“In India, the most used spread is ghee, then butter, cheese, low fat butter,margarine, cheese spread and mozzarella cheese.TargetingChanging retail environmentStriking out on its own, with Amul Outlets or parlours to deliver consumers totalbrand experienceLaunched in 2002, there are now 400 Amul parlours across the country, whichcontributed 3% to the brand’s total turnover last year.High profile locations: Amul parlours are today present on campuses of Infosys,Wipro, IIM-A, IIT-B, Temples, Metro rail and railway stations in Gujarat.Positioning• A mass market player, no premium offerings• USP – Quality with affordability• Up against niche players – value addition to customers• Sheer size and scale of operation• New offerings for health conscious and vibrant India –

Health and energy drinksStamina, a health drink made from milk with added vitamin C against RedBull and Gatorade, milk better than cola. Aimed at youngsters, priced atRs 12Ice-creamProbiotic and sugar-free variantsChocolatessugar-free brand called Choco-Mini to target the diabeticMARKETING STRATEGIES4 MAIN STRATEGIESWhat goes into the ‘contract’ that is a brand name?First is quality. No brand survives long if its quality does not equal or exceedwhat the buyer expects. There simply can be no compromise. That’s the essence of thecontract. In the case of a food product, this means that the brand must always representthe highest hygienic, bacteriological and organoleptic standards. It must taste good, and itmust be good.Second, value for money. If our customer buys an Amul product, she getswhat she pays for, and more. We have always taken pride in the fact that while we earn agood income for our owners – the dairy farmers of Gujarat – we don’t do it at the cost ofexploiting the consumer. Even when adverse conditions have reduced supplies ofproducts like butter, we have resisted the common practice of raising prices, chargingwhat the market would bear. Rather, we have kept prices fair and done our best to ensurethat retailers do not gain at the consumers’ expense.Third, availability. A brand should be available when and where the customerwants it. There is no benefit achieved in creating a positive brand image, and then beingunable to supply the customer who wants to buy it. In our case, over the years we havebuilt what is probably the nation’s finest distribution network. We reach hundreds ofcities and towns through a cold chain that not only ensures that our products areavailable, but they reach the customer at the farthest end of the country with the samequality as you would find in Ahmedabad or Vadodara.Fourth, service. We have a commitment to total quality. But, occasionally, wemay make a mistake – or, our customer may think we’ve made a mistake, and thecustomer, as they say, is always right. That is why, for Amul, every customer complaintmust be heard – not just listened to. And, every customer complaint must be rectified tothe extent humanly possible.For close to fifty years now, Amul has honoured its contract with the consumer. Thecontract that is symbolised by the Amul brand means quality. It means value for money.

It means availability. And it means service.EXPANSION TO FOREIGN SHORES• Gujarat Cooperative Milk Marketing Federation had signed an agreement withWal-Mart to stock its shelves with products under its Amul brand name. Amulprocessed cheese, pure ghee, Shrikhand, Nutramul, Amul's Mithaee GulabJamuns are few of the products marketed in the US markets.• 50 per cent of Americans being medically obese, and if Amul is really looking tocapture the hearts of the second- and third-generation Indians, offering low-fatversions of its brands, would make a lot of commercial sense.• Hence targeting the large Indian community in the US markets with its nicheproducts like mithai, packaged ready to eat foods market it can definitely expandits market to a large extent.COMPETITORSButter• Britannia• NestleCheese• BritanniaBaby Food• Nestle• HeinzDairy Whitener Segment• Nestle• BritanniaIce creams• HLLChocolates & Confectionaries• Cadbury• NestlePizza• Pizza Hut• Dominos• Nirulas Frozen pizzaCurd• Nestle• Mother DairyUltra High Treated Milk• Nestle• BritanniaSweet Condensed milk• NestleCottage Cheese(Paneer)• BritanniaMilk Additives• Cadbury• Smithkline BeechamFlavored Milk• Britannia• NestleUTTTERLY, BITTERLY, MALICIOUS - AMUL’S

INTERNAL POWER TUSSLEAmul owner Gujrat Co-operative Milk Marketing Federation Limited (GCMMF) is in agrip of power tussle between its chairman and managing director who quit last week.After BN Vyas exit there is a confusion in Pathi Bhatal as continuance. It is smoothrunning food company biggest in the country having a value of Rs 8000 Crore whichserves 27 lakhs families with bread and butter. It has Board of directors consisting of 13members. It faced similar leadership crisis when Founder Verghese Kurien stepped downafter three decades.In 2008-2009 GCMMF had a turnover of 28% though the milk procurement rose only by15%. Due to the entry of politicians into the board its operations are in danger. Itsposition in market could get hampered as it has lost its clout in Delhi after Kurien’s Exit.Due to this MNC such as Nestle and Danane and Indian corporate power houses likereliance that have been kept away from the Indian dairy market during Mr. Kurien’stenure have burst into the market.Pune based Parag Foods and Agri-Processor Anil group of gujrat are all looking toexpand aggressively.Mr Bhatol named RS Sodhi, chief general manager, as GCMMF’s interim managingdirector. Mr Sodhi appeared unfazed by the bickerings plaguing GCMMF in his firstinteraction with ET after taking charge.“The functioning of GCMMF has not been affected on account of recent developments. Itis business is as usual for Amul.”There are others who share his optimism.“Amul is a very strong brand. It is too premature to comment on the future of the brandsince the present conflict is an internal matter of the federation,” said Chandan Nath,president of Mudra Ignite, the agency that once promoted Amul’s Dhara edible oil.

Case Study - Brand Amul The Taste of India

AMUL- The Taste of India

Born: 1946, christened in 1955n 1955

History: Originally marketed by the Kaira District Cooperative Milk Producers’ Union, Anand, it was taken over by the Gujarat Cooperative Milk Marketing Federation (GCMMF) in 1973

Status: Has a 15% market share in the Rs15,000 crore milk category, and a 37% share in the Rs900 crore organized ice-cream segment.

Starting with milk and milk powder, the Amul brand today covers a range of dairy products—from chocolates to cheese and, of course, butter

Brand story: If a brand’s value is to be judged by the ease with which it can be recalled, and then Amul’s marketing campaign wins hands down.

With its clever use of topical events, Amul’s utterly butterly campaign—it has the distinction of entering the Guinness World Records as the longest running campaign—has won the brand several accolades.

Playing the role of a social observer, its weekly comments have tickled India’s funny bone since 1967, when Sylvester Da Cunha’s irrepressible Amul girl first had her say.

But what’s kept the brand going all these years? “We have changed the packag ing, our technology and our approach to mar keting based on the changing taste buds of our consumers.

However, the only thing that has helped us sail smoothly is that we have not changed our core values—give the best quality product to the consumer, and the best possible price. It holds true in any era,” says B.M. Vyas, managing director, GCMMF.

In fact, it is not just the core values at Amul that have remained the same; the core team associated with the brand is still the same. Even the advertising agency hasn’t changed, and Da Cunha and FCB Ulka, have played a pivotal role in the growth of Amul.

“This has helped us maintain consistency in our communication. Our strategy of umbrella branding has also helped establish our brand firmly in people’s minds. This, despite the fact that we do not spend more than 1% of our turnover for marketing, compared with 7-8% (spent) by most of the food and consumer product companies,” R.S. Sodhi, head of marketing, GCMMF, says.

From Utterly butterly delicious Amul to The Taste of India, Amul continues to be the toast of the country.

A Brand Story ofByAbhinav GoelPGP(2003-2005)IIM KozhikodeSections: -Part I Part VIPart II Part VIIPart III Part VIIIPart IV Part IXPart V Part X2IntroductionAmul – The Taste of India, a brand so distinctively Indian, has been a part of our livesfor nearly five decades now and still is able to touch a chord in our hearts. As a brandAmul has grown from being merely a differentiating factor to protect the interests ofproducers and consumers, and has now become a critical success factor in the veryexistence and growth of a movement that started way back in the pre-independenceIndia.The GenesisAmul sprung from the seeds sown in the black soil of Charotar, an area in the Kairadistrict of Gujarat, as a cooperative movement to empower the milk producers. Thebeginning of the journey this brand embarked upon is itself quite unique and needsgreater scrutiny. The milk producers’ cooperative formed in Gujarat was in response tothe monopoly that existed since the time of colonial India. At that time Polson Dairy wasthe biggest buyer of the milk being produced in Kaira. Polson was built on the basis ofproviding superior quality products to up-market consumers. “Polson” was in fact abrand as synonymous with butter as “Xerox” is with photocopy. However Polson’sproducts were not the reason that led to the rise of Amul, it was its exploitative practicesthat started the cooperative revolution. Polson indeed played the role of Goliath toAmul’s David. The challenge that lay before the milk cooperative was not only toupstage Polson’s monopoly on the supply side, but also to capture the booming milk3products market with a their own brand. So the very basis of competition became highquality value-for-money products. It was under such circumstances that the foundationsof Amul were laid.For several years the Kaira cooperative supplied milk and allied products without aformal distribution network leave alone a brand name. However under the leadership ofVerghese Kurien the brand name Amul was formally adopted. When the need of abrand name for the Kaira Cooperative was felt initially, the word was circulated in Anand(the birth place of Amul) among friends and cooperative members. The name Amul wasmost probably suggested by a quality control expert in Anand. It was derived from”amulya”, which in Sanskrit, Gujarati and many other Indian languages, meanspriceless, and implies matchless excellence. As an Indian name, it associated itself with

pride in swadeshi goods, a striking contrast to the English sound of Polson. The namewas short, memorable and easily pronounced. It could also serve as an acronym for theorganization – the unusable KDCMPUL (Kaira District Cooperative Milk Producer’sUnion Limited) taken from Kaira Cooperative’s full name, could be substituted by AMUL,standing for Anand Milk Union Limited. Although not the Cooperative’s true name itunmistakably conveyed the desired meaning. Even though Amul products have been inuse in millions of homes since 1946, the brand Amul was registered only in 1957. Thedifficulty in registration stemmed from the fact that the cooperative had to prove enoughsales and advertisements before this common word could be established as a brandname of a dairy product.The Growth EraAmul came into being as a consequence of a revolution and it has continued to berevolutionary in every stage of its life. It initially started a as means to balance thefluctuating milk supply and grew at a phenomenal rate as a liquid milk supplier. TheKaira Union began pasteurizing milk for the Bombay Milk Scheme in 1948. However bythe 1950s it was amply clear that the future lay in manufactured dairy products. Amulresponded by embarking on a wide range of dairy processing activities, involving newtechnologies, and by expanding its processing facilities. It challenged the established4Polson brand in butter manufacturing, and then moved on to sweetened condensed milkin direct confrontation with the international giant Nestle. It also locked horns with Glaxoover the production of baby food in India. On all of these occasions Amul not onlydisplayed feats of resilience but in fact came out much stronger than ever before.Amul realized it as early as late 1960s that the only way it could increase the share ofthe market was by maintaining the reasonable prices of its products, but widening therange. During 1966-1970, Amul added sweet buttermilk powder, a second brand ofbaby food (Amulspray) and a high protein weaning food (Balamul). In 1974 the AmulMilk Chocolate was released commercially and was followed by several varieties ofchocolates and chocolate confectionaries. Also, Nutramul, a malted cocoa beveragewas launched in 1976. Cheese powder was released commercially in the early 70s.As district unions multiplied, Kaira Cooperative recognized the benefits of a marketingfederation and thus the Gujarat Cooperative Milk Marketing Federation (GCMMF) wasestablished in 1973. GCMMF commenced marketing on April 1, 1974under the single brand name of Amul. In 1978-79 it registered a turnoverof Rs. 100 crore which grew to Rs. 539.67 crore in 1987-89. In 2002-03the turnover stood at Rs. 2745.70 crore. At present GCMMF has 2.28million producer members with a total milk collection in 2002-03 being 1.86 billion litres.The success rate has been to the extent that GCMMF has now become India's largestfood products marketing organization. (An overview of GCMMF and sales turnover forthe past 10 years is provided in Appendix A)GCMMF test marketed Amul Cheese spread in 1983 following it with a new softercheese spread. In 1982, it introduced Amul Shrikhand in Bombay, and brought out newflavors between 1986 and 1989. Amul UHT milk in tetra packs, with a shelf life of 15days, was released in 1983 and by 1988-89 UHT milk with shelf life of 60 days hadbecome available. Between 1987 and 1989, Amul Choco Shake, Amul Elaichi Shake,and Amul Lassi were successfully marketed in tetra bricks.5In the 1990s, Amul continued on an expansion path and several new product rangeswere added to its portfolio. A much deeper Amul Cheese range with Amul Malai Paneerand Amul Pizza Cheese, extended Amul Mithaee range with Gulabjamuns and Kulfimix, a wider UHT milk range Amul Taaza milk and Amul Fresh Cream, fresh milk range

with brands like Amul Gold, Amul Smart and Amul Shakti, a new Curd range with AmulMasti Dahi, and a new Milk drink – Amul Shakti Flavored Milk. Amul also startedaggressive marketing of its wide array of Ice creams posing stiff competition toestablished players like HLL’s Kwality Walls and Mother Dairy. Recently it alsointroduced ready to serve soups under the brand name of Masti. (A complete productlisting of Amul is provided in Appendix B)Today Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, AmulChocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya havemade Amul a leading food brand in India. Amul has evolved from its traditional imageand now is a symbol of many things. Of high-quality products sold at reasonable prices.Of the genesis of a vast co-operative network. Of the triumph of indigenous technology.Of the marketing savvy of a farmers' organisation. And of a proven model for dairydevelopment.The Road AheadWhat does the Amul saga tell us after all? Is it just a play of Indian sentiments or Amulneeds more than the magic of its Butter Girl? Well let us now take a look at some of therecent initiatives taken by Amul and try to visualize the brand some years down the line.Growing Exports:GCMMF is India's largest exporter of Dairy Products today with a "Trading House"status. Many of Amul’s products are now available in the USA, Gulf Countries andSingapore. Amul has successfully capitalized its quality product offerings to win thehearts of overseas consumers and thereby has opened vast international markets forproducts like Amul Butter, Pure Ghee, Mithai, Cheese, Nutramul etc. With a strongdomestic brand image Amul is now in the process of transforming itself into a trulyglobal brand. A pat on the back is that Young & Rubicam's proprietary Brand AssetValuator (BAV), which has studied brands worldwide since 1993, has recognized Amulas a highly respected brand in league with Maruti and Raymond’s.Developing e-Competency:Amul made an important decision in 1995 toadopt “information technology integration” as astrategic thrust. The objective was to create newefficiencies in all aspects of business, heightencompetitiveness, and extend market reach (bothwithin India and in export markets). A website(http://www.amul.com) was constructed featuringsports information, recipes and quizzes (tostimulate buyer interest and to establish nationalbrand recognition) and business-to-consumerorder placement. Amul cyberstores have nowbeen set up in 125 locations in India, the USA,Singapore and Dubai. Amul has now set up10separate cyber stores for its popular ice creams as well. Each visit to the Indiancyberstore sites results in purchases averaging over Rs. 300. An e-mail database ofcustomers is also being prepared. The remarkable thing is that all this has beenacheieved in a matter of just 7-8 years despite a high “touch-and-feel” consumer culturein India. As the company website claims “The Taste of India is now a few clicks awayfrom your doorstep...”Adding a Service Dimension:Recently Amul undertook an initiative which is still quite untested but which offers amarketing move that can play a branding role, boost sales and add new revenue

stream. This all could be possible as Amul is now adding a service element to itsproduct offerings. Amul has started preparing and selling pizza slices that prominentlyfeature generous portions of Amul cheese. Amul’s pizza slices are being sold throughsuper markets and large departmental stores that have snack counters and microwaveovens.The move to add a service dimension was necessitated by the fact that Amul now facesstiff competition on many fronts with Britannia as its leading competitor. The increasedcompetition in cheese market motivated Amul to expand its business into selling pizzaslices, in the hope that it will boost sales and make cheese products more accessible.Search for new markets:Amul recently entered the fresh milk market in Delhi, the stronghold of National DairyDevelopment Board’s (NDDB) Mother Dairy. This move was met with an unprecedenteddemand which has altered the entire competitive scenario in Delhi. Amul currently has acapacity of only 80,000 litres per day (LPD) which it plans to ramp up to three lakh litresper day (LLPD). It is believed to be actively looking at alliances with dairies locatedaround Delhi and its neighborhood. It is also planning to set up a new five lakh litre perday (LLPD) dairy plant in Haryana to cater to the northern market. It seems Delhi’s justthe beginning and Amul is all set to tap the dairy business all over India leveraging itsbrand.11In June 2003 Amul tied up with petro retailer IBP for selling its products like ice creams,flavored milk, pizzas and sweets from its retail outlets. This alliance not only adds valueto the petrol stations but also provides Amul a whole new nation-wide retailing chainthrough which it can tap currently unexplored markets.Enhancing visibilityAccording to RS Sodhi, General Manager (Marketing), GCMMF “An umbrella brand hasa universal core value like a family tree. However, until and unless an umbrella brand isstrong and trustworthy enough, consumers and retailers will be hesitant to easily acceptany new product doled out from the same company, even if the new product category isassociated with its umbrella brand. Also, a successful umbrella brand will enable acompany to spend one per cent on advertising campaigns, as compared to six to sevenper cent which is otherwise spent on promoting an independent brand.” Taking from thisviewpoint the marketing strategy of Amul becomes clear where the brand “Amul” isextensively promoted in all of its advertisements. Amul is now aggressively promotingits brand through all kinds of media and especially the thrust recently has been on thenewly introduced products like ice creams. Although some advertisements maybeproduct-specific yet the power of brand Amul is always there. (A selection of Amuladvertisements is available in Appendix D)A Final WordAmul is an amazing and inspiring story of how a milk producers’ cooperative movementcreated a brand so powerful that it has not only lasted for five decades but has growninto a giant in the food industry. It has risen from Indian soil and it remains Indian inevery sense. With roots well established in the domestic market Amul is all set to fight inthe global arena. With the commitment it has shown in the past it will not be too longwhen Amul emerges a winner on all fronts.12Appendix AGujarat Cooperative Milk Marketing Federation: An OverviewGujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest foodproducts marketing organization. It is a state level apex body of milk cooperatives inGujarat which aims to provide remunerative returns to the farmers and also serve the

interest of consumers by providing quality products which are good value for money.Members: 12 district cooperative milk producers' UnionNo. of Producer Members: 2.28 millionNo. of Village Societies: 11,132Total Milk handling capacity: 6.7 million litres per dayMilk collection (Total - 2002-03): 1.86 billion litresMilk collection (Daily Avg 2002-03): 5.08 million litresMilk Drying Capacity: 510 metric Tons per dayCattlefeed manufacturing Capacity: 1450 Mts per dayAppendix BComplete List of Products Marketed under Amul BrandBreadspreads:• Amul Butter• Amul Lite Low Fat Breadspread• Amul Cooking ButterCheese Range:• Amul Pasteurized Processed Cheddar Cheese• Amul Processed Cheese Spread• Amul Pizza (Mozarella) Cheese• Amul Shredded Pizza Cheese14• Amul Emmental Cheese• Amul Gouda Cheese• Amul Malai Paneer (cottage cheese) Frozen and Tinned• Utterly Delicious PizzaMithaee Range (Ethnic sweets):• Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom)• Amul Amrakhand• Amul Mithaee Gulabjamuns• Amul Mithaee Gulabjamun Mix• Amul Mithaee Kulfi MixUHT Milk Range:• Amul Taaza 3% fat Milk• Amul Gold 4.5% fat Milk• Amul Slim-n-Trim 0% fat milk• Amul Chocolate Milk• Amul Fresh Cream• Amul Snowcap Softy Mix• Amul Taaza Double Toned MilkPure Ghee:• Amul Pure Ghee• Sagar Pure Ghee15• Amul Cow GheeInfant Milk Range:• Amul Infant Milk Formula 1 (0-6 months)• Amul Infant Milk Formula 2 ( 6 months above)• Amulspray Infant Milk FoodMilk Powders:• Amul Full Cream Milk Powder

• Amulya Dairy Whitener• Sagar Skimmed Milk Powder• Sagar Tea and Coffee WhitenerFresh Milk:• Amul Taaza Toned Milk 3% fat• Amul Gold Full Cream Milk 6% fat• Amul Shakti Standardised Milk 3% fat• Amul Smart Double Toned Milk 1.5% fatSweetened Condensed Milk:• Amul Mithaimate Sweetened Condensed MilkCurd Products:• Amul Masti Dahi (fresh curd)• Amul Butter Milk• Amul Lassee16Chocolate & Confectionery:• Amul Milk Chocolate• Amul Fruit & Nut Chocolate• Amul EclairsBrown Beverage:• Nutramul Malted Milk FoodMilk Drink:• Amul Shakti Flavoured MilkReady to Serve Soups:• Masti Tomato Soup• Masti Hot & Sour SoupAmul Icecreams:• Royal Treat Range (Rajbhog, Cappuchino, Chocochips,Butterscotch, Tutti Frutti)• Tricone Cones (Butterscotch, Chocolate)• Nature's Treat (Alphanso Mango, Fresh Litchi, Anjir, Fresh Strawberry, BlackCurrant)• Nut-o-Mania Range (Kaju Drakshi, Kesar Pista, Roasted Almond, KesarCarnival, Badshahi Badam Kulfi, Shista Pista Kulfi)• Utsav Range (Anjir, Roasted Almond)• Simply Delicious Range (Vanilla, Strawberry, Pineapple, Rose, Chocolate)17• Sundae Range (Mango, Black Currant, Chocolate, Strawberry)• Millennium Icecream (Cheese with Almonds, Dates with Honey)• Milk Bars (Chocobar, Mango Dolly, Raspberry Dolly, Shahi Badam Kulfi, ShahiPista Kulfi, Mawa Malai Kulfi, Green Pista Kulfi)• Cool Candies (Orange, Mango)• Cassatta• Megabite Almond Cone• Frostik - 3 layer chocolate Bar• Fundoo Range - exclusively for kids• SlimScoop Fat Free Frozen Dessert (Vanilla, Banana, Mango, Pineapple)• Health : Isabcools

Nutralite

History of Zydus CadilaCadila Laboratories was founded in 1952 by Shri Ramanbhai Patel (1925-2001), formerlya lecturer in the L.M. College of Pharmacy, and his business partner Shri IndravadanModi. The company evolved over the next four decades into one of India's establishedpharmaceutical companies.In 1995 the Patel and Modi families split, with the Modi family's share being moved intoa new company called Cadila Pharmaceuticals Ltd. and Cadila Healthcare became thePatel family's holding company. Cadila Healthcare did its IPO on the Bombay StockExchange in 2000. Its stock code on the Bombay exchange is 532321.In 2001 the company acquired another Indian pharmaceutical company called GermanRemedies. On June 25, 2007, the company signed an agreement to acquire 100 per centstake in Brazils Quimica e Farmaceutica Nikkho do Brasil Ltda (Nikkho) for around 26million dollars.Zydus Cadila is an innovative global pharmaceutical company that discovers, develops,manufactures and markets a broad range of healthcare products. The group’s operationsrange from API to formulations, animal health products and cosmeceuticals.Headquartered in the city of Ahmedabad in India, the group has global operations in fourcontinents spread across USA, Europe, Japan, Brazil, South Africa and 25 other emergingmarkets.Its mission to create healthier communities globally, Zydus Cadila delivers wide ranginghealthcare solutions and value to its customers. With over 8,000 employees worldwide, aworld-class research and development centre dedicated to discovery research and eightstate-of-the-art manufacturing plants, the group is dedicated to improving people’s lives.Board of director Register & corporate officePankaj R. Patel Zydus Tower”(Chairman & M.D.) Satelite Cross RoadAhmedabad - 380015Mukesh M. PatelPranlal BhogilalSharvil P. PatelH.K. BilpoliwalaH. DhanrajgirA.S. Diwanji

Company Product:Apart from a strong presence in the prescription market, the group also caters to thegrowing health and wellness segment through it consumer division. The ConsumerProducts Division of Zydus Cadila aims to promote ‘healthy living’ by anticipating theemerging and day-to-day needs in dietetic / health foods. Health and wellness have beenidentified as the emerging areas in consumer healthcare. The Consumer ProductsDivision is focussed on empowering individuals who wish to adopt healthy eating habitsand lifestyles.The Consumer Products Division is a pioneer, offering healthier dietary options to theconsumers. The product range comprises Sugar Free Gold– India’s No.1 sweetener witha market share of over 70%, Sugar Free Natura– a zero calorie sucralose based sugarsubstitute, Sugar Free D’lite– a low calorie healthy drink and Nutralite– a premiumcholesterol- e spread free tableThe Division also caters to the skincare segment with its Everyuth and Dermacare brands,which occupy a unique distinction of being a ‘skincare brand from a healthcarecompany’. Enriched with the power of natural ingredients, EverYuth has a strongpresence in advancedskincare segments like soap-free, face washes, face masks, scrubsetc.Nutralite BrandNutralite is better than butterZydus Cadilla is a bold marketer. First it fought with the sugar by launching the sugaralternative - Sugarfree Natura and now its fighting with butter by relaunching the brandNutralite.Nutralite is table margarine. World over margarine are used as a substitute for butter.Margarines are fat derived from either animal products or vegetable oils. The veggiemargarines are used as a healthy alternative for butter.Nutralite was acquired by Zydus in 2006. The brand was then relaunched with acontroversial positioning " Better than Butter ". The slogan prompted Amul to take theissue to ASCI which directed Zydus to substantiate the claims in their future campaigns.The organized branded butter market in India is estimated to be around Rs800 crore( source : Moneycontrol). The market is dominated by Amul.Nutralite brand achieves relevance owing to the changing lifestyles of urban Indianconsumer. The affluent laid back lifestyle has created lot of lifestyle diseases andprompted the urban Indian consumer to be health conscious. The increasing incidence of

heart problems and diabetes has paved the way for the emergence of health foods. Zydusis trying to cash in on this health wave.Nutralite is positioned directly as a healthy alternative to butter. Like the SugarFreeNatura,Nutralite also wants the health conscious consumer to choose it to the ordinary butter.The logic behind the positioning is that Nutrilite has less cholesterol and does not containhydrogenated fats compared to butter. It also has PUFA ( poly unsaturated fatty acid ) andMUFA (monounsaturated fatty acids ) which are known cholesterol fighters.The brand was relaunched with television commercial showing the husband indulging inAalu Paratha without being worried about health.The controversy over the slogan - better than butter has prompted the brand to slightlyalter the positioning to :Healthier than Butter.The brand is now running a high decibel campaign featuring Sathish Shah. The messageof the ad is to encourage the consumers to indulge in food without worrying about health.The brand is targeting the ladies in the households who are worried about their husband'shealth.Nutralite aims to corner 8-10% of the butter market. The direct attack on butter willdefinitely catch the attention of the consumer. But whether this attention will betranslated to sales is something to watch for.Convincing the consumer to opt for Nutralite instead of butter is not an easy task. Firstlythe brand has to convince the customer that the good old Amul Butter is unhealthy.Second it has to achieve parity ( Points of parity) with butter. Then it has to convince thecustomer that Nutralite is indeed healthy. Hence the brand has no other alternative but todirectly attack butter.Margarines are not popular in India and the category is non-existent. The high profilelaunch of Nutralite may also see an emergence of margarines as a new product category.Putting all doubts to rest in the wake of recent reports in some sections of the media,Zydus Cadila has clarified that it stands by its contention that Nutralite is better thanbutter.Elaborating on this, the company’s medical advisor, Dr. Ravindra Mittal, MD (Medicine)said, “to understand why Nutralite, is a better and healthier alternative to butter, it is

important to know the basic distinction between fats of animal origin and those of plantorigin.Fats of animal origin, like butter, have high content of saturated fats, cholesterol and lowlevels of unsaturated fats. This is likely to cause an increased risk of heart disease(coronary artery disease).This is backed by scientific evidence and supported by various published medicalliterature like API textbook of Medicine and Davidson’s Principles and Practice ofMedicine”Nutralite which tastes like butter carries with it the advantage of being cholesterol free,low in saturated fats and also high in unsaturated fats – all of which make its profilehealthier. This makes Nutralite an ideal substitute for butter.While the conventional margarines are manufactured through the hydrogenation processand contain trans fats that are not healthy, Nutralite is not manufactured through thehydrogenation process and this sets it apart. The trans fats in Nutralite are belowdetectable limits.World over, the consumption of margarine is 2 times than that of butter particularly in thedeveloped countries and is sold across the world. The American Heart Associationrecommends the use of margarine as a substitute for butter.The Advertising Standards Council of India (ASCI), which is self regulatory body hadprocessed the complaint of Gujarat Co-operative Milk Marketing Federation (GCMMF)and had observed that we need to substantiate and quantify our claims in theadvertisement itself.Looking at the space constraints, it is often not possible to substantiate and quantify theclaims, which are otherwise quite obvious and self explanatory. “However, as aresponsible member of the ASCI and in view of the fact that we have a very soundscientific evidence to back our claims, we shall substantiate and quantify these claims inall our future communications”, stated a communiqué from the company.Zydus Cadila to acquire NutraliteStrengthening its presence in the healthy dietary supplement segment, Zydus Cadila hasacquired a 14.9 percent stake in Carnation Nutra-Analogue Foods, the manufacturers ofNutralite, branded margarine that currently enjoys a market share close to 60 percent.Zydus Cadila has now made a public offer to acquire additional 20 percent stake inCarnation Nutra-Analogue Foods, to raise its holding. The acquisition includes thecompany’s manufacturing plant.Nutralite will be marketed by Zydus Cadila’s Consumer Products Division whichcurrently markets its sweetener brand—Sugar Free.Speaking on the new development, Mr Pankaj R Patel, Chairman and Managing Director,

Zydus Cadila said, “We see this acquisition as an excellent synergistic opportunity tooffer a healthy dietary supplement.”Process of NutraliteFormulation plantsThe company operates formulation plants at six locations:Moraiya plant - Zydus Cadila's formulation plant at Moraiya in Sanand taluka on theoutskirts of Ahmedabad is the largest formulation plant in India. It plant became Foodand Drug Administration (FDA)-approved in 2004/2005. The plant makes tablets,capsules, and soft gel capsules as well as injectable drugs in both sterile liquid andlyophilized form. Zydus Cadila also runs a large R&D operation at Moraiya;Vatwa plant - Zydus Cadila's plant at Vatwa, an industrial suburb of Ahmedabad, makesnutraceuticals. The plant was acquired Remedies;Changador plant - Zydus Cadila's plant at Changodar, 20 kilometres from Ahmedabadon the city's outskirts, manufactures fine chemicals. Zydus is current constructing afacility at Changodar to make vaccines for hepatitis B and rabies.Navi Mumbai plant - This operation, at Navi Mumbai in Maharashtra, is a 50/50 jointventure with Germany's Altana Pharma AG, makes intermediates of the drugpantoprazole.Goa plants – The company's plants at Ponda in the southern Indian state of Goa doformulation work as well as manufacture oncology drugs and a herbal laxative brandedAgiolax based on Psyllium seeds.Baddi plant - In 2004 Zydus commissioned at formulation plant at Baddi, in HimachalPradesh state of northern India. The Baddi plant makes solid oral pharmaceuticals. plantat mumbai where tablets are made from hands of labours.Nutralite Margarine relaunched at 'Better Food Show'MUMBAI: Post the acquisition of 61.5 per cent stake in Carnation Nutra AnalogueFoods, the makers of Nutralite, Zydus Cadila have re-launched its brand NutralitePremium Margarine.The food show was an attempt to introduce healthy food preparations using Nutralite,which is a healthier alternative to butter. The menu included popular dishes like ButterChicken labeled Better Chicken, Butter Paneer Masala labeled Better Paneer Masala andmany other Better dishes prepared with Nutralite replacing other edible oils/butter, assertsan official release.Zydus Cadila Ltd. executive director Ganesh Nayak said, "We intend to offer the Indianconsumer healthier dietary choices to counter health risks posed by oils/fats - which are

the root cause of all lifestyle disorder in IndiaSavoring the better food menu were celebrities, food critics and healthcare practitionerslike cardiologists, dieticians and endocrinologists who appreciated the concept and thefood preparations too.Guests present included food critic Rashmi Uday Singh, actor Perizaad Zorabian, fitnessexpert Leena Mogre, obesity consultant Dr M. Lakdawala and several others.Speaking about Nutralite's game plan Nayak said, "We want to establish Nutralite as thehealthier alternative to butter and capture a market share of 8-10 per cent of the 800million branded butter market over the next 2 years."Considering that in the western countries margarine sales are 2 times that of butter, Zydusbelieves that the opportunity in the Indian market presents a huge untapped market, givenits distinctly superior health benefits vs butter.Considering that in the western countries margarine sales are 2 times that of butter, Zydusbelieves that the opportunity in the Indian market presents a huge untapped market, givenits distinctly superior health benefits vs butter.Nutralite comes to the foodie’s rescueWhat is a foodie’s favourite question? ‘Khane mein kya hai?’ Well, that’s also the lineZydus Cadila’s margarine brand, Nutralite, is using in its new TVC featuring Satish Shah& Ratna Pathak Shah.The ad shows the protagonist (Shah) asking his wife (Pathak Shah), “Khaane mein kyahai?” He asks her the question at every meal time. She tells him tantalising menu optionssuch as ‘aloo parathas’, ‘pav bhaji’, club sandwiches, etc. Each time, he drools, thinking,“Aaah, butter!” But what Pathak Shah actually puts before him is hardcore health food,like fruit and salads.Each time, she offers a flimsy excuse for why the original dish could not be served. Shetells him the ‘aloo parathas’ got burnt, and the children finished the sandwiches. Shahlooks increasingly forlorn each time. At this juncture, a male voiceover says, ‘Butter sebachne ke liye itne bahane’ and Pathak Shah is shown shaking her head in helplessness.The VO continues, ‘Le aaiye butter se better Nutralite, jisme cholesterol nahin and no

harmful fats’.(Brand ambassador of nutralite)The final shot shows Shah back from work. His wife has laid out a banquet with all hisfavourite food. The children and she ask in unison, “Khaane mein kya hai ?” The addends with the Nutralite products hot.The ad was created by Mudra Ahmedabad and the team that handled the account includesChandan Nath, Sanjay Menon, Vaibhav Kerlekar, Kapil Oza, Mehul Zolapura fromcreative, Ronak Shah and Robin Varghese from account management, and ShuchikaRathod from account planning. The film was directed by Prahlad Kakar and produced byGenesis.Sanjay Menon, executive creative director, Mudra Ahmedabad, explains that Nutralitehas been distinctly positioned as a “healthy upgrade” to butter since its launch in 2006.The communication stresses on the fact that Nutralite is healthier than butter with nocholesterol and low saturated fats.Sharing the insight for the film, Menon says, “Research showed that for a housewife, thekitchen is her report card and the appreciation she gets from cooking tasty food is a bigthrill. But she faces a dilemma: While she loves to prepare her family’s favourite dishes,generally rich and heavy food, she also knows that it’s her responsibility to ensure thateveryone stays healthy. So, how does she balance both?”Using this insight, the film shows Pathak Shah come up with novel reasons to keep herhusband away from unhealthy food. The film resolves this predicament by saying that ifshe uses Nutralite, she can let her husband indulge in his favourite food.Menon adds, “Also ‘Khane mein kya hai’ is something you keep hearing. When peoplewant to check what’s being prepared, they call their wives on the way home, or checkwith the boys in the office canteen, etc.” The tagline used in the ad is ‘Better than butter,khaodabakar’.Interestingly, the TVC capitalises on the hit comedy show on STAR One, Sarabhai vsSarabhai, in which Pathak Shah and Shah play husband and wife. In the serial, too, thewife, Maya, keeps trying to get her husband to eat healthy. But Menon insists this wasn’ttheir first thought. “We were looking for someone who could play a foodie and wethought of Satish Shah. Then later, we thought of Ratna Pathak Shah and realised the

pairing would get more noticeability since they play husband and wife in such a popularshow.”This is the brand’s second phase of communication. The first was done in December2007. That TVC showed a man waking up and expecting a lavish breakfast of ‘alooparathas’, but his wife is sparing with the butter, which mars his enjoyment. That’s whenNutralite is introduced in the ad.Zydus buys 14.96% in Nutralite makerAHMEDABAD: Zydus Cadila on Friday said it has bought a 14.96per cent stake inAhmedabad-based Carnation Nutra-Analogue Foods, the manufacturers of margarinebrand Nutralite, and said it will raise the holding through a subsequent open offerannounced on Friday.Zydus Cadila chairman and managing director Pankaj Patel told ET that he had acquiredthe shares at Rs 150 each from the market. "It is a friendly transaction," he said. Thecurrent promoters of Carnation, Ashish Amin and family, hold around 20per cent of theshares.Shares of Carnation Nutra-Analogue Foods, which is listed on the BSE, rose Rs 11, or7.6per cent, on Friday to close at Rs 155.25 against the previous close of Rs 144.45.Carnation Nutra-Analogue Foods' acquisition includes the company's manufacturingplant in Gujarat along with a network of 350 distributors. In fiscal '05-06. CarnationNutra-Analogue Foods had posted a turnover of Rs 30 crore and an estimated net profitof about Rs 3.5 crore, a company executive said.India's largest selling margarine Nutralite currently enjoys a marketshare close to 60percent in the fat-free margarine segment. The Zydus Cadila executive explained the Rs1,200 crore pharmaceutical major has acquired over 8.3 lakh shares representing 14.96percent stake for a consideration of approximately Rs 13 crore.The company now intends to increase its holding through an open offer to acquireadditional 20per cent stake. An open offer is mandatory as per Securities and ExchangeBoard of India (Sebi) rules.Carnation Nutra-Analogue Foods, a Gujarat-based listed company was set up in 1994 tomanufacture and market dairy substitute or modified dairy health products likemargarine, spreads, non-hydrogenated shortenings and speciality fats.Margarine is a healthier substitute for butter and is free from cholesterol. Nutralite willnow be marketed by Zydus Cadila's consumer products division. The company currentlymarkets sweetener brand, 'Sugar Free' in India."Over the past few years, our focus has been on supporting healthy lifestyles and this

forms an essential part of our healthcare business. We have market leadership in thesweetener segment through our brand Sugar Free and we see this acquisition as anexcellent synergistic opportunity to offer a healthy dietary supplement. Freedom fromcalories that people enjoy with Sugar Free is now extended to freedom from cholesterolwith Nutralite," Mr Patel said in a statement issued to the media here.Nutralite pushes 'healthy upgrade' stanceMudra has rolled out a campaign for Nutralite to reinforce its positioning as a 'healthyupgrade' to butter. According to the company's spokesperson, rresearch has indicated thatmarried women, who are responsible for preparing meals for their family, face a seriousdilemma.While a married woman loves to prepare her family's favourite dishes - generally heavyand rich food, she knows that it's her responsibility to ensure that everyone stays healthy.Based on this insight, the film shows that the protagonist (Ratna Pathak) is forced tocome up with novel reasons to keep her husband (Satish Shah) away from unhealthyfood.In response to her husband's 'Khane mein kya hai?' (a line commonly used to find outwhat's on the menu), she misleads him by saying that the parathas he was craving forwere burnt, or that the club sandwich he wanted desperately were eaten by the kids.The film resolves this predicament by saying that with Nutralite she can make herhusband's favourite food healthier and allow him to indulge in it.Creative Team: Sanjay Menon, Vaibhav, Kapil Oza, Mehul ZolapuraProduction House :GenesisCreative agency : MundraZydus Cadila re-launches Nutralite MargarinePost the acquisition of 61.5% stake in Carnation Nutra Analogue Foods, the makers ofNutralite, Zydus Cadila today re-launched its brand Nutralite Premium Margarine in anall new avtar. It was a unique launch party in the form of a food show called -The BetterFood Show.The food show was an attempt to introduce healthy food preparations using Nutralite,which is a healthier alternative to butter. The menu included popular dishes like ButterChicken labeled ‘Better’ Chicken, Butter Paneer Masala labeled ‘Better’ Paneer Masalaand many other Better dishes prepared with Nutralite replacing other edible oils/butter. It

is not a well known fact that margarine can replace oil and butter and can be used foralmost all food preparations, making them healthy and cholesterol free.“We intend to offer the Indian consumer healthier dietary choices to counter health risksposed by oils/fats – which are the root cause of all lifestyle disorders in India” said Mr.Ganesh Nayak, Executive Director Zydus Cadila Ltd.Savoring the Better food Menu were Celebrities, food critics and well known healthcarepractitioners like Cardiologists, Dieticians and Endocrinologists who appreciated theconcept and the food preparations too. Guests present included noted food critic, RashmiUday Singh, Actor Perizaad Zorabian, fitness expert, Leena Mogre, reputed obesityconsultant Dr M. Lakdawala, and several others.Zydus Cadila may foray into malted food beverageThe kids’ health beverage market with likes of Bournvita, Complan and Horlicks justseem to be hotting up. After foraying into several healthcare consumer products likeSugar Free Natura, Everyuth and Dermacare, Ahmedabad-based Cadila Healthcare Ltd.,the Rs 2,300 crore Zydus group, is eyeing the malted food beverages (MFB) segment.While officials are tightlipped about the project citing confidentiality, sources close to thedevelopment said that the company is conducting R&D on the product. At an earlyproduct development stage, the project has been kept under wraps by Cadila Healthcare.Moreover, the company is also yet to decide upon a brand name for the MFB.The move is seen as an obvious step towards the company's attempts to consolidate on itshealthcare consumer products. The company is supposedly aiming at creating adistinction between its pharmaceutical and healthcare consumer products and is believedto be mulling to shift its consumer products division to its listed company, CarnationNutra-Analogue Foods Limited (CNAFL). CNAFL is, apparently, the manufacturer of thepopular margarine brand 'Nutralite'.Eventually, Cadila Healthcare plans to increase its brands in the healthcare andnutraceutical segments and is likely to add more products to its current portfolio.Currently, Zydus has top selling consumer products like Sugar Free Gold, Sugar FreeNatura, Sugar FreeD’lite, Everyuth and Dermacare in the Cadila Healthcare basket.The company has begun aggressive marketing and ad campaigning of its Sugar Freebrand and has signed up actor Bipasha Basu as its brand ambassador. Apart from SugarFree brand, the group's Nutralite has also been a popular product in the market.Cadila Healthcare's robust plans of foraying into fresh segments might give impetus to its

performance given the 25 per cent growth rate in the consumer product division by thecompany in 2007-08.Cadila Healthcare's robust plans of foraying into fresh segments might give impetus to itsperformance given the 25 per cent growth rate in the consumer product division by thecompany in 2007-08.Carnation Nutra to change name to Zydus WellnessCarnation Nutra Analogue Foods, a subsidiary of Ahmedabad-based Cadila Healthcare,popularly known as Zydus Cadila, may change its name to Zydus Wellness soon. Ademerged consumer products division of Zydus Cadila, Carnation is likely to pass aspecial resolution for the same at its upcoming extra ordinary general meeting (EGM) onDecember 30, 2008.Carnation Nutra was hived off as part of Zydus Cadila's plans to consolidate on itsconsumer products division. The change in name is also believed to be a move towardsthe same.Recently, Zydus also relaunched its popular Nutralite brand as Nutralite PremiumMargarine. The company intends to capture a market share of 8-10 per cent of the Rs 800crore-odd branded butter market over the next two years.For the financial year 2007-08, Carnation, which markets Nutralite, one of the largestselling butter substitute, pegged a turnover of Rs 57.9 crore.Amul, Zydus cross swords over butter commercialGURGAON: It’s an utterly butterly claim that has not gone down well with the marketleader. Gujarat Co-operative Milk Marketing Federation (GCMMF), which sells thecountry’s largest butter brand Amul, has raised objections to Ahmedabad-based ZydusCadila’s latest ad campaign for its NutraLite margarine brand. Zydus has positioned itsNutraLite margarine as a product that is better than butter.GCMMF, which had recently written to the Standard Council of India (ASCI) againstseveral claims made by NutraLite through its ads, obtained a positive response from theASCI on Monday, upholding GCMMF’s claim.The ASCI, in its note to GCMMF, a copy of which ET has obtained, states, “We havewritten to the advertiser to withdraw/modify the said ad, to which we are awaitingtheir response.”While Round One of the battle has gone in Amul’s favour, Zydus plans to make acounter claim and present a fresh case before the ASCI, justifying its stance. ZydusCadila senior vice-president Anand G Deo said, “We are meeting the ASCI on Tuesdaywith all necessary documentary proofs which back our claims.GCMMF officials, on their part, insist that NutraLite’s advertising is ‘denigrating and

discrediting’ butter as a category. Amul’s chief general manager RS Sodhi said, “Theadvertising makes unfair comparisons between two completely different productcategories. It is like comparing cheese with chalk.” In its letter to the ASCI, Amul hadstated: ‘NutraLite’s campaign which says butter is made from animal fat’ is misleadingand categorises butter as a non-vegetarian product, which is not true. Further, theadvertisement states that butter contains high cholesterol which increases the risk of heartdisease.Cholesterol is essential for various body metabolisms. And there is no conclusivescientific evidence that proves that cholesterol intake is linked to heart diseases.Secondly, the cholesterol content of butter is relatively low.” The letter adds thatNutraLite’s packaging conceals essential facts about the product, such as total fat content,trans-fat content, saturated fats, and so on. The letter also states that NutraLite containsthe same amount of fat and calories as in butter.While NutraLite is positioned as 100% fat-free margarine, GCMMF has two butter-basedbrands in its portfolio Amul butter and Amul Lite — a butter-based low-fat bread spread.Amul monopolises the Rs 600-crore domestic butter market with an over 85% brandshare. The margarine market, on the other hand, re-mains very small, estimated at a littleover Rs 60 crore.Cadila Healthcare is an Indian pharmaceutical company headquartered at Ahmedabad inGujarat state of western India. The company is the fifth largest pharmaceutical companyin India with US$290m in turnover in 2004. It is a significant manufacturer of genericdrugs

Britannia Industries Limited is an Indian company based in Kolkata that is famous for its Britannia and Tiger brands of biscuit, which are highly recognised throughout the country. Britannia is one of India’s leading biscuit firms, with an estimated 38% market share.[1]

The Company's principal activity is the manufacture and sale of biscuits, bread, rusk, cakes and dairy products.

History

It was started way back in 1892 with an investment of Rs. 295.[2] Initially, biscuits were manufactured in a small house in central Kolkata. Later, the business was acquired by the Gupta brothers and operated under the name of V.S. Brothers. In 1918, C H Holmes, an English businessman in Kolkata was taken as a

partner and The Britannia Biscuit Company Limited (BBCo) was launched. The Mumbai factory was setup in 1924 and Peek Freans, UK acquired a controlling interest in BBCo. Biscuits were in big demand during World War II, which gave a fillip to the company’s sales. The company name was changed to the current Britannia Industries Limited in 1979. In 1982 Nabisco Brands Inc., USA became a major foreign shareholder

Kerala businessman K. Rajan Pillai secured control of the group in the late 1980s, becoming known in India as the 'Biscuit King'. In 1993, the Wadia Group acquired a stake in ABIL, UK and became an equal partner with Groupe Danone in Britannia Industries Limited. In what The Economic Times referred to as one of [India's] most dramatic corporate sagas,[3] Pillai ceded control to Wadia and Danone after a bitter boardroom struggle,[4] then fled his Singapore base to India in 1995 after accusations of defrauding Britannia, and died the same year in Tihar Jail.[5]

[edit] Growth and profitability

The company is a growing and profitable one. Between 1998 and 2001, the company's sales grew at a compound annual rate of 16 per cent against the market, and operating profits reached 18 per cent. More recently, the company has been growing at 27 per cent a year, compared to the industry's growth rate of 20 per cent. At present, 90 per cent of Britannia’s annual revenue of Rs2,200 crore comes from biscuits.

[edit] Business

[edit] Dairy products

Dairy products contribute close to 10 per cent to Britannia's revenue.[6] Britannia trades and markets dairy products, and its dairy portfolio grew at 47% in 2000-01 and by 30% in 2001-02. Britannia holds an equity stake in Dynamix Dairy and had outsourced the bulk of its dairy products from its associate. Its main competitors are Nestle India, and the National Dairy Development Board (NDDB),and amul(GCMMF)[7]

[edit] Joint venture with New Zealand Dairy

On 27 October 2001, Britannia announced a joint venture with Fonterra Co-operative Group of New Zealand, an integrated dairy company from procurement of milk to making value-added products such as cheese and buttermilk.[7] Britannia planned to source most of the products from New Zealand, which they would market in India.[6] The joint venture will allow technology transfer to Britannia.[7] Britannia and New Zealand Dairy each holding 49% of the JV, and the remaining 2 per cent held by a strategic investor. Britannia has also tentatively announced that its dairy business would be transferred and run by the joint venture.[7]

The authorities' approval to the joint venture obliged the company to start manufacturing facilities of its own. It would not be allowed to trade, except at the wholesale level, thus pitching it in competition with Danone, which had recently established its own dairy business.[7]

[edit] Biscuits

The company's factories have an annual capacity of 433,000 tonnes.[1] The brand names of biscuits include VitaMarieGold, Tiger, Nutrichoice Junior,Good Day, 50 50, Treat, Pure Magic, Milk Bikis, Good Morning, Bourbon, Thin Arrowroot, Nice, Little Hearts and many more.

Tiger, the mass market brand, realised $150.75 million in sales including exports to countries including the U.S. and Australia, or 20% of Britannia revenues in 2006.

The company alleged that Danone has violated its intellectual property rights in the Tiger brand by registering and using Tiger in several countries in 2006 without the consent of the Britannia Board. Managing Director Vinita Bali claims the company found out in 2004 Danone launched the Tiger brand in Indonesia in 1998, and later in Malaysia, Singapore, Pakistan and Egypt when it attempted to register the Tiger trademark in some of these countries.[8] Whilst it was initially reported in December 2006 that agreement had been reached,[9] it was reported in September 2007 that a solution remained elusive.[8] In the meantime since Danone's biscuit business has been taken over by Kraft, the Tiger brand of biscuits in Malaysia has been renamed Kraft TiGER Biscuits beginning September 2008.

Britannia initiated legal action against Danone in Singapore in September 2007.[10]

The dispute has been resolved with Denone paying Rs 220 Million for utilising the brand, and Britannia securing legitimate right to use the Tiger brand worldwide[11]

[edit] Ownership and relationship between major shareholders

The Wadias' Kalabakan Investments and Groupe Danone have two equal joint venture companies, Wadia BSN and UK registered Associated Biscuits International Holdings Ltd., which together hold 51 per cent stake in Britannia.[12] The ABIH tranche was acquired in 1992, while the controlling stake held by Wadia BSN was acquired in 1995. It was agreed that, in case of a deadlock between the partners, Danone is obliged to buy the Wadia BSN stake at a "fair market value". ABIH which has a separate agreement signed in 1992 and is subject to the British law.[12] [13]

Wadia was to be Danone's partner in the food and dairy business, and product launches from Groupe Danone’s were expected but never materialised despite the JV being in existence for over 11 years in India.[12] Under the 1995 joint venture agreement, Danone is prohibited from launching food brands within India without the consent of the Wadias.[14] In addition, the partners agreed there would be the right of first refusal to buy out the remaining partner in the event of the other wishing to sell its holding.[15]

In May 2007, Nusli Wadia told the Ministry of Commerce and Industry that Danone invested in a Bangalore-based bio nutrition company, Avesthagen, in October 2006 in violation of the government's Press Note 1, 2005, which requires a foreign company to obtain the consent of its Indian joint venture partner before pursuing an independent business in a similar area, including joint ventures based purely on technical collaboration. Danone argued that Press Note 1 did not apply to it as it did not have a formal technology transfer or trademark agreement with Avesthagen, and that its 25 pct holding in Britannia was indirect.[16] Wadia also filed a case in the Bombay High Court for a breach of a non-compete clause in that connection. The court ordered Danone not to alienate, encumber or sell shares of Avestagen.[17]

In September 2007, the Foreign Investment Promotion Board of India rejected Danone's claims that it does not need a non-compete waiver from the Wadias to enter into business in India alone.[18]

In June 2006, Wadia claimed Danone had used the Tiger brand to launch biscuits in Bangalore.[15]

After a prolonged legal battle, Danone has finally agreed to sell its stake in Britannia and get out of this line of business. Danone will sell its 25.48% stake to Leila Lands, which is a Wadia group entity based in Mauritius. The deal is valued to be at $175–200 m. With this buy-out, Wadia's will hold a majority stake of 50.96%.

Britannia to add 3 more dairy units

Bakery and dairy products major Britannia Industries Ltd, on Monday said that the company's dairy business is poised for double-digit growth based on the forthcoming launch of new products.

The company is set to add three more dairy units in the country by the year-end through packagers.

“We currently have 12 dairy units. Of them, one unit, based at Vikarabad near Hyderabad, is fully owned by the company, rest are through partners. We are in the process of adding three more dairy plants by the year end,” Ms Vinita Bali, Managing Director of Britannia Industries, said.

Addressing a press conference here today after the launch of a milk-based chocolate drink, Ms Bali said there is potential to grow the dairy business. “As the product portfolio expands, we will be able to grow this business by double digit,” she said.

TigerZor Choco Milk, introduced in Hyderabad and Bangalore, is priced at Rs 17 for a 150-ml bottle. Available in chocolate flavour, it can be consumed in ambient temperatures and has a shelf life of four months. But it is best served chilled. The Head of Dairy Business, Britannia, Mr Vinod Menon, said research indicates that children tend to be averse to a daily glass of milk though they know it is good for health. Morever, children, he said, are bored to have a plain glass of milk at fixed times. This milk-based drink, with five active nutrients, seeks to address such kids who can carry it in backpacks. “We believe this product creates a category in itself and will be convenient to carry. The drink is ideal for the overall development of mind and body. Its packaging adds to convenience,” he explained.

The company plans to introduce the product gradually in other parts in the South and western regions.

Referring to pressure on margins, Ms Bali said the price of some of the commodities have gone up. Apart from monitoring regularly, internally, this is addressed by improving efficiencies and cost reduction.

On a query on declining sales, Ms Bali said the company's sales was impacted in the first half of last year. However, this trend was reversed from July last. Thereafter, volumes were going up.

History

The company dates to 1867, when two separate Swiss enterprises were founded that would later form the core of Nestlé. In the succeeding decades the two competing enterprises aggressively expanded their businesses throughout Europe and the United States.

In August of 1867 Charles A. and George Page, two American brothers from Lee County, IL, established the Anglo-Swiss Condensed Milk Company in Cham. Their first British operation was opened at Chippenham, Wiltshire in 1873.[3]

In September 1867, in Vevey, Henri Nestlé developed a milk-based baby food and soon began marketing it. Henri Nestlé retired in 1875, but the company, under new ownership, retained his name as Farine Lactée Henri Nestlé. In 1877 Anglo-Swiss added milk-based baby foods to its products, and in the following year the Nestlé company added condensed milk, so that the firms became direct and fierce rivals.

In 1905 the companies merged to become the Nestlé and Anglo-Swiss Condensed Milk Company, retaining that name until 1947, when the name Nestlé Alimentana SA was taken as a result of the acquisition of Fabrique de Produits Maggi SA (founded 1884) and its holding company, Alimentana SA of Kempttal, Switzerland. Maggi was a major manufacturer of soup mixes and related foodstuffs. The company’s current name was adopted in 1977. By the early 1900s, the company was operating factories in the United States, United Kingdom, Germany and Spain. World War I created new demand for dairy products in the form of government contracts; by the end of the war, Nestlé's production had more than doubled.

After the war, government contracts dried up and consumers switched back to fresh milk. However, Nestlé's management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestlé's first expansion into new products, with chocolate the company's second most important activity.

Nestlé felt the effects of World War II immediately. Profits dropped from US$20 million in 1938 to US$6 million in 1939. Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the company's newest product, Nescafé, which was a staple drink of the US military. Nestlé's production and sales rose in the wartime economy.

The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings and soups. Crosse & Blackwell followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding in L'Oréal in 1974. In 1977, Nestlé made its second venture outside the food industry by acquiring Alcon Laboratories Inc.

In 1984, Nestlé's improved bottom line allowed the company to launch a new round of acquisitions, notably American food giant Carnation and the British confectionery company Rowntree Mackintosh in 1988, which brought the Willy Wonka Brand to Nestlé.

ProductsMain article: List of Nestlé brands

Nestlé has 6,000 brands,[10] with a wide range of products across a number of markets including coffee (Nescafé), bottled water, other beverages (including Aero (chocolate) & Skinny Cow), chocolate, ice cream, infant foods, performance and healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food.

Joint ventures

Nestlé holds 26.4% of the shares of L'Oréal, the world's largest company in cosmetics and beauty. The Laboratoires Inneov is a joint venture in nutritional cosmetics between Nestlé and L'Oréal, and Galderma a joint venture in dermatology with L'Oréal. Others include Cereal Partners Worldwide with General Mills, Beverage Partners Worldwide with Coca-Cola, and Dairy Partners Americas with Fonterra.

Nestle India: Feeling the inflation heat

Increasing input costs, competition have taken a toll on the margins. There is little indication that this will improve.

Along with others in the country, the management at Nestle India would also be looking skywards and hoping for a normal monsoon. After all, a lot depends on rains, especially the company's profitability. Nestle India relies on the agricultural sector as it provides the company with key raw materials, the cost of which amounts to as much as 45 per cent of sales.

As witnessed in the quarter ended March, when liquid milk prices were higher by 30 per cent, wheat flour 70 per cent and sugar 25 per cent, the company's operating profit margins took a hit, declining to 20 per cent — almost 300 basis points below the previous year. Higher ad-spends and rising power and fuel costs also grew. As a result, net earnings for the March quarter were just about two per cent up.

Now, thanks to an unrelenting food inflation, pressure on the company’s margins remain. While sugar prices may have eased, milk and wheat flour rates remain on the higher side. The fuel price hike is also there for all to see. And, if the monsoon does not turn out well, there could be a telling impact. More so because the company finds it difficult to raise prices as competition is heating up, especially in noodles.

Maggi, the market leader with an 80-90 per cent share in the Rs 1,300-crore segment, is being challenged by Hindustan Unilever with its Knorr ('Soupy Noodles') and GSK Consumer ('Foodles'). The market, according to analysts, is not growing seamlessly to accommodate new players. So, Maggi would have to shed some share. Overall, the Maggi brand accounts for 20-25 per cent of Nestle’s revenues and is the largest contributor to Nestle’s incremental sales growth.

The company would also be facing competition in the coming months in the milk products segment, with French player Danone making an entry in the curd market and intending to expand further. And, there are other worthy adversaries like Kraft (along with Cadbury) waiting on the fence to encroach onto Nestle’s territory.

The management has mentioned it would look at volume growth and will launch its cereal brands, too. It would also be looking at staggered price rises, believe analysts. So, even as these plans fructify, the hope remains for a good monsoon as well as a cooling down of prices.