CASE STUDY:

Amul – the taste of india

About Amul

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

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.

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.

What is Amul all about?

BUSINESS needs ideas, not merely money. Ventures run on just money, but starved of ideas, would eventually fall prey to competition and perish. And, if ideas are available in abundance, business can overcome other handicaps, including its relative weaker money power, compared to that of its rivals. The success story of the Gujrat Co-operative Milk Marketing Federation (GCMMF) proves this point.

Amul follows a unique business model, which aims at providing 'value for money' products to its consumers, while protecting the interests of the milk-producing farmers who are its suppliers as well as its owners. Despite being a farmers' co-operative, Amul has given multinationals a run for their money.

The Amul Pattern has established itself as a uniquely appropriate model for rural development. Amul has spurred the White Revolution of India, which has made India the largest producer of milk and milk products in the world. It is also the world's biggest vegetarian cheese brand.

Amul’s is India’s largest diary producing company with over half the market leading other national companies such as Mother Diary and multinational food product companies such as Nestle India and Hindustan Lever Ltd.

Amul demonstrates how careful and consistent product stewardship combined with a deep and intimate understanding of the market leads to consistent growth and success. The company can process nearly 10 million litres of milk each day.

The company started as the Gujarat Cooperative Milk Federation in 1946,collecting just 250 litres of milk a day. The company was formed to give farmers their due and protect them from unscrupulous middlemen. Since then the company has come a long way . but one thing is still the same . that time also it was by and for the farmers and today also it’s the same .

In the mid 1950’s Amul looked for ways to utilize the surplus milk by manufacturing Butter, Milk,Cheese and other milk derived products.

It is integrated into the fabric of Indian society ,from its roots in representing small farmers and struggler or the poor and impoverished in difficult circumstances.

The brand name Amul, sourced from the Sanskrit word Amoolya, means priceless. It was suggested by a quality control expert in Anand. Some cite the origin as an acronym to (Anand Milk Union Limited)

Amul, a brand owned by the 26 lakh milk producers of Gujarat has once again demonstrated that when farmers are given the instruments of development in their hands, they can work wonders. The billion dollar Gujarat Co-operative Milk Marketing Federation, the apex body of 13 district milk producers’ unions has been instrumental in making Amul a brand to reckon with.

GCMMF Today

GCMMF is India's largest food products marketing organisation. It is a state level apex body of milk cooperatives in Gujarat, 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. GCMMF markets and manages the Amul brand. From mid-1990's Amul has entered areas not related directly to its core business

The AMUL experience has attracted considerable interest from the development community – predominantly anthropologists, development & agriculture economists, and political scientists. Key areas of their enquiry have been the role of AMUL in reducing social and economic inequality

AMUL’s Journey towards Excellence

AMUL’s journey towards excellence is marked by some critical understanding of the business environment in large emerging economies like India where markets have to be developed by combining efficiency related initiatives with increasing the base of marginal suppliers and consumers. The essence of AMUL’s efforts was as follows:

• It combined market and social development in an emerging economy. It recognized the inter-linkages between various environments that governed the lives of marginal milk farmers and the unmet needs of consumers. It also changed the supply chain paradigm in order to reduce the cost to the consumer while increasing the return to the supplier.

• It realized that in order to achieve their objectives, it had to benefit a large number of people – both suppliers and consumers. While large scale had the danger of failure due to poor control and required more resources, it also had the advantage of creating a momentum that would be necessary to bring more people into the fold and thereby help more suppliers and consumers.

• It also realized that its goal could only be achieved in the long run and this required developing values in people and processes that were robust, replicable and transparent.

• It also realized that the cooperative would not be independent and viable in the face of competition if it were not financially sound. This implied that AMUL had to develop distinct capabilities that would deliver competitive advantage to its operations.

Thus this is a brief overview of Amul – The taste of India .

Reasons to Success

People power:Amul's secret of success

The system succeeded mainly because it provides an assured market at remunerative prices for producers' milk besides acting as a channel to market the production enhancement package. What's more, it does not disturb the agro-system of the farmers. It also enables the consumer an access to high quality milk and milk products. Contrary to the traditional system, when the profit of the business was cornered by the middlemen, the system ensured that the profit goes to the participants for their socio-economic upliftment and common good.

Looking back on the path traversed by Amul, the following features make it a pattern and model for emulation elsewhere. Amul has been able to:

Bring at the command of the rural milk producers the best of the technology and harness its fruit for betterment

Provide a support system to the milk producers without disturbing their agro-economic systems

Plough back the profits, by prudent use of men, material and machines, in the rural sector for the common good and betterment of the member producers  and

Even though, growing with time and on scale, it has remained with the smallest producer members. In that sense, Amul is an example par excellence, of an intervention for rural change.

Umbrella Brand Strategy

The network follows an umbrella branding strategy. Amul is the common brand for most product categories produced by various unions: liquid milk, milk powders, butter, ghee,

cheese, cocoa products, sweets, ice-cream and condensed milk. 

Amul's sub-brands include variants such as Amulspray, Amulspree, Amulya and Nutramul. The edible oil products are grouped around Dhara and Lokdhara, mineral water is sold under the Jal Dhara brand while fruit drinks bear the Safal name. 

By insisting on an umbrella brand, GCMMF not only skillfully avoided inter-union conflicts but also created an opportunity for the union members to cooperate in developing products. 

PRODUCT LINE OF AMUL

BREADSPREADS:

o Amul Butter

o Amul Lite Low Fat Breadspread

o Amul Cooking Butter

o Delicious Margarine

PURE GHEE:

o Amul / Sagar Pure Ghee

MILK POWDERS:

o Amul Full Cream Milk Powder

o Amulya Dairy Whitener

o Sagar Skimmed Milk Powder

o Sagar Tea and Coffee Whitener

o Sweet condensed milk

o Amul Mithaimate

SWEETS:

o Amul Shrikhand & Amrakhand

o Amul Mithaee Khoya Gulabjamaun

o Amul Basundi

AMUL FRESH MILK:

o Amul Taaza Toned Milk 3% fat

o Amul Gold Full Cream Milk 6% fat

o Amul Shakti Standardised Milk 4.5% fat

o Amul Slim & Trim Double Toned Milk 1.5% fat

o Amul Saathi Skimmed Milk 0% fat

o Amul Cow Milk

o Amul Yogi, A Flavoured Yoghurt

o Amul Masti Dahi (Fresh Curd)

o Amul Lite Dahi (Fresh Low Fat Curd)

o Amul Prolife probiotic Dahi (Fresh Probiotic Curd)

o Amul Buttermilk (Available Fresh in Pouch Pack)

o Amul Masti Spiced Butter Milk

o Amul Lassee

AMUL ICECREAMS:

o Vanilla Royale

o Royal Treat Range (Butterscotch, Rajbhog, Malai Kulfi)

o Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza, Roasted Almond)

o Nature's Treat (Alphanso Mango, Fresh Litchi, Shahi Anjir, Fresh Strawberry, Black Currant,

Santra Mantra, Fresh Pineapple)

o Sundae Range (Mango, Black Currant, Sundae Magic, Double Sundae)

o Assorted Treat (Chocobar, Dollies, Frostik, Ice Candies, Tricone, Chococrunch, Megabite,

Cassatta)

o Utterly Delicious (Vanila, Strawberry, Chocolate, Chocochips, Cake Magic)

o Amul SUGAR FREE Frozen Foods (Milk Based Sweet)

o Amul ProLife Probiotic Ice cream

CHOCOLATES AND CONFECTIONARY:

o Amul Fruit & Nut Chocolate

o Amul Bindazz

o Amul Rejoice

o Amul kesar

HEALTH DRINK:

o Nutramul Malted Milk Food

AMUL MILK DRINK:

o Amul Kool Flavoured Milk (Mango, Strawberry, Saffron, Cardamom, Rose, Chocolate,

Butterscotch)(Right now AMUL stopped its AMUL KOOL Production)

o Amul Kool Cafe amul sexy gums

o Amul Kool Koko

Customer Based Market Segmentation:

Product Mix- Product For Every One

AMUL NEVER FORGOT ITS “PRIMARY CUSTOMER”

o Amul collects 447,000 ltrs of milk from 2.12 million farmers (many illiterate)

PRODUCT FOR YOUTH

o Amul launched Chocolate milk under brand name of ‘Amul Kool Koko’ targeting the youth

PRODUCT FOR DIABETIC PEOPLE

Children

Youth

Women

Calorie Conscious

Health Conscious

o India’s First Pro-Biotic Wellness Ice cream & Sugar Free Delights For Diabetics

PRODUCT FOR THE HEALTH CONSCIOUS

o Amul Launched “low fat, low cholesterol bread spreads”

PRODUCT FOR THE PRICE SENSITIVE INDIA

o Low Priced Amul Ice Creams and affordable ‘sagar’ whitener

PRODUCT FOR THE URBAN CLASS

o Amul launched emmental, Gouda and pizza mozzarella cheese

Amul’s Competitive Edge:

Developing Demand

At the time Amul was formed, consumers had limited purchasing power, and modest consumption levels of milk and other dairy products. Thus Amul adopted a low-cost price strategy to make its products affordable and attractive to consumers by guaranteeing them value for money. 

Introducing higher value products 

Beginning with liquid milk, GCMMF enhanced the product mix through the progressive addition of higher value products while maintaining the desired growth in existing products. 

Despite competition in the high value dairy product segments from firms such as Hindustan Lever, Nestle and Britannia, GCMMF ensures that the product mix and the sequence in which

Amul introduces its products is consistent with the core philosophy of providing milk at a basic, affordable price. 

The distribution network 

Amul products are available in over 500,000 retail outlets across India through its network of over 3,500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products. 

GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other major FMCG companies. This practice is consistent with GCMMF's philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping. 

Wholesale dealers carry inventory that is just adequate to take care of the transit time from the branch warehouse to their premises. This just-in-time inventory strategy improves dealers' return on investment (ROI). All GCMMF branches engage in route scheduling and have dedicated vehicle operations. 

Managing the supply chain 

Even though the cooperative was formed to bring together farmers, it was recognized that professional managers and technocrats would be required to manage the network effectively and make it commercially viable. 

Coordination Given the large number of organizations and entities in the supply chain and decentralized responsibility for various activities, effective coordination is critical for efficiency and cost control. GCMMF and the unions play a major role in this process and jointly achieve the desired degree of control. 

Buy-in from the unions is assured as the plans are approved by GCMMF's board. The board is drawn from the heads of all the unions, and the boards of the unions comprise of farmers elected through village societies, thereby creating a situation of interlocking control. 

The federation handles the distribution of end products and coordination with retailers and the dealers. The unions coordinate the supply side activities. 

These include monitoring milk collection contractors, the supply of animal feed and other supplies, provision of veterinary services, and educational activities. 

Managing third party service providers 

From the beginning, it was recognized that the unions' core activity lay in milk processing and the production of dairy products. Accordingly, marketing efforts (including brand development) were assumed by GCMMF. All other activities were entrusted to third parties. These include

logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, provision of animal feed, and veterinary services. 

It is worth noting that a number of these third parties are not in the organized sector, and many are not professionally managed with little regard for quality and service. 

This is a particularly critical issue in the logistics and transport of a perishable commodity where there are already weaknesses in the basic infrastructure. 

Product Portfolio

Category Market Share Market Position

Butter, Ghee 85% 1

Milk Powder 40% 1

Cheese 50% 1

Ice-cream 24.75% 2

Sweets 50% 1

Chocolate Drink 90% 1

Chocolate 10% 3